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Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
10-Q
 
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                    
to
                    
Commission file number
1-13879
 
 
INNOSPEC INC.
(Exact name of registrant as specified in its charter)
 
 
 
DELAWARE
 
98-0181725
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
8310 South Valley Highway
 
Suite 350
 
Englewood
 
Colorado
 
80112
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (303) 792 5554
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common stock, par value $0.01 per share
 
IOSP
 
NASDAQ
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such file.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer      Accelerated filer  
Non-accelerated
filer
     Smaller reporting company  
Emerging growth company       
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☐    No  
Indicate the number of shares outstanding of each of the issuer’s classes
o-f
common stock, as of the latest practicable date.
 
Class
  
Outstanding as of July 31, 2020
Common Stock, par value $0.01
   24,567,952
 
 
 

Table of Contents
TABLE OF CONTENTS
 
PART I
 
  
 
2
 
     
Item 1
 
  
 
2
 
 
 
  
 
2
 
 
 
  
 
3
 
 
 
  
 
4
 
 
 
  
 
5
 
 
 
  
 
6
 
 
 
  
 
7
 
 
 
  
 
9
 
Item 2
 
  
 
22
 
 
 
  
 
22
 
 
 
  
 
23
 
 
 
  
 
32
 
Item 3
 
  
 
34
 
Item 4
 
  
 
35
 
     
PART II
 
  
 
36
 
     
Item 1
 
  
 
36
 
Item 1A
 
  
 
36
 
Item 2
 
  
 
36
 
Item 3
 
  
 
37
 
Item 4
 
  
 
37
 
Item 5
 
  
 
37
 
Item 6
 
  
 
37
 
   
  
 
38
 

Table of Contents
CAUTIONARY STATEMENT RELATIVE TO FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Such forward-looking statements include statements (covered by words like “expects,” “estimates,” “anticipates,” “may,” “believes,” “feel,” “plan,” “intends” or similar words or expressions, for example) which relate to earnings, growth potential, operating performance, events or developments that we expect or anticipate will or may occur in the future. Although forward-looking statements are believed by management to be reasonable when made, they are subject to certain risks, uncertainties and assumptions, including, the effects of the COVID-19 pandemic, such as its duration, its unknown long-term economic impact, measures taken by governmental authorities to address it and the manner in which the pandemic may precipitate or exacerbate other risks and/or uncertainties, and our actual performance or results may differ materially from these forward-looking statements. Additional information regarding risks, uncertainties and assumptions relating to Innospec and affecting our business operations and prospects are described in Innospec’s Annual Report on Form 10-K for the year ended December 31, 2019, Innospec’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, this Form 10-Q and other reports filed with the U.S. Securities and Exchange Commission. You are urged to review our discussion of risks and uncertainties that could cause actual results to differ from forward-looking statements under the heading “Risk Factors” in such reports. Innospec undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
1

Table of Contents
PART I    FINANCIAL INFORMATION
Item 1    Condensed Consolidated Financial Statements
INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    
Three Months Ended

June 30
   
Six Months Ended

June 30
 
(in millions, except share and per share data)
  
2020
   
2019
   
2020
   
2019
 
Net sales
   $ 244.9      $ 362.4      $ 617.2      $ 750.7  
Cost of goods sold
     (185.8      (251.3      (444.2      (521.8
  
 
 
    
 
 
    
 
 
    
 
 
 
Gross profit
     59.1        111.1        173.0        228.9  
Operating expenses:
               
Selling, general and administrative
     (63.5      (71.2      (127.9      (143.7
Research and development
     (8.1      (8.2      (16.7      (17.3
Restructuring charge
     (21.1      0.0        (21.1      0.0  
Impairment of intangible assets
     (19.8      0.0        (19.8      0.0  
  
 
 
    
 
 
    
 
 
    
 
 
 
Total operating expenses
     (112.5      (79.4      (185.5      (161.0
  
 
 
    
 
 
    
 
 
    
 
 
 
Operating (loss)/income
     (53.4      31.7        (12.5      67.9  
Other income, net
     0.1        0.0        4.0        4.1  
Interest expense, net
     (0.5      (1.2      (1.1      (2.7
  
 
 
    
 
 
    
 
 
    
 
 
 
(Loss)/income before income tax expense
     (53.8      30.5        (9.6      69.3  
Income tax credit/(expense)
     14.1        (8.2      3.0        (18.3
  
 
 
    
 
 
    
 
 
    
 
 
 
Net (loss)/income
   $ (39.7    $ 22.3      $ (6.6    $ 51.0  
  
 
 
    
 
 
    
 
 
    
 
 
 
Earnings per share:
               
Basic
   $ (1.62    $ 0.91      $ (0.27    $ 2.08  
  
 
 
    
 
 
    
 
 
    
 
 
 
Diluted
   $ (1.62    $ 0.90      $ (0.27    $ 2.07  
  
 
 
    
 
 
    
 
 
    
 
 
 
Weighted average shares outstanding (in thousands):
               
Basic
     24,564        24,483        24,547        24,468  
  
 
 
    
 
 
    
 
 
    
 
 
 
Diluted
     24,564        24,678        24,547        24,671  
  
 
 
    
 
 
    
 
 
    
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
2

Table of Contents
INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
    
Three Months Ended
June 30
   
Six Months Ended
June 30
 
(in millions)
  
2020
   
2019
   
2020
   
2019
 
Net (loss)/income
   $ (39.7   $ 22.3     $ (6.6   $ 51.0  
  
 
 
   
 
 
   
 
 
   
 
 
 
Other comprehensive income/(loss):
        
Changes in cumulative translation adjustment, net of tax of $(0.1) million, $0.3 million, $1.5 million and $0.1 million respectively
     5.5       3.4       (2.4     (1.6
Changes in unrealized losses on derivative instruments, net of tax of $0.0 million, $0.1 million, $0.0 million and $0.2 million respectively
     0.0       (0.7     0.0       (1.2
Amortization of prior service credit, net of tax of $0.0 million, $0.1 million, $0.1 million and $0.1 million respectively
     (0.2     (0.3     (0.4     (0.5
Amortization of actuarial net losses, net of tax of $0.0 million, $0.0 million, $(0.1) million and $0.0 million respectively
     0.6       0.0       0.8       0.0  
  
 
 
   
 
 
   
 
 
   
 
 
 
Total other comprehensive income/(loss)
     5.9       2.4       (2.0     (3.3
  
 
 
   
 
 
   
 
 
   
 
 
 
Total comprehensive (loss)/income
   $ (33.8   $ 24.7     $ (8.6   $ 47.7  
  
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
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INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(in millions, except share and per share data)
  
June 30,

2020
    
December 31,

2019
 
    
(Unaudited)
        
Assets
     
Current assets:
     
Cash and cash equivalents
   $ 58.2      $ 75.7  
Trade and other accounts receivable (less allowances of $4.3 million and $3.8
 
million respectively)
     213.4        292.0  
Inventories (less allowances of $18.0 million and $14.5 million respectively):
     
Finished goods
     175.4        173.9  
Raw materials
     68.2        70.7  
  
 
 
    
 
 
 
Total inventories
     243.6        244.6  
Prepaid expenses
     9.7        14.7  
Prepaid income taxes
     8.0        2.5  
Other current assets
     0.0        0.8  
  
 
 
    
 
 
 
Total current assets
     532.9        630.3  
Net property, plant and equipment
     198.9        198.7  
Operating lease
right-of-use
assets
     29.5        32.4  
Goodwill
     363.3        363.0  
Other intangible assets
     82.3        113.5  
Deferred tax assets
     8.9        9.1  
Pension asset
     118.6        115.9  
Other
non-current
assets
     4.6        5.9  
  
 
 
    
 
 
 
Total assets
   $ 1,339.0      $ 1,468.8  
  
 
 
    
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
.
 
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INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - (Continued)
 
(in millions, except share and per share data)
  
June 30,

2020
   
December 31,
2019
 
    
(Unaudited)
       
Liabilities and Equity
    
Current liabilities:
    
Accounts payable
   $ 74.1     $ 122.0  
Accrued liabilities
     118.8       154.0  
Current portion of finance leases
     0.6       1.0  
Current portion of plant closure provisions
     6.3       5.6  
Current portion of accrued income taxes
     8.4       10.3  
Current portion of operating lease liabilities
     11.0       10.6  
  
 
 
   
 
 
 
Total current liabilities
     219.2       303.5  
Long-term debt
     38.8       58.6  
Finance leases, net of current portion
     0.2       0.5  
Plant closure provisions, net of current portion
     51.6       43.7  
Accrued income taxes, net of current portion
     32.4       36.2  
Unrecognized tax benefits
     15.2       16.4  
Operating lease liabilities, net of current portion
     18.6       21.9  
Deferred tax liabilities
     44.0       49.6  
Pension liabilities and post-employment benefits
     17.9       17.8  
Other
non-current
liabilities
     1.4       1.7  
Equity:
    
Common stock, $0.01 par value, authorized 40,000,000 shares, issued 29,554,500 shares
     0.3       0.3  
Additional
paid-in
capital
     333.0       330.4  
Treasury stock (4,985,884 and 5,047,278 shares at cost, respectively)
     (93.8     (93.3
Retained earnings
     736.1       755.5  
Accumulated other comprehensive loss
     (76.4     (74.4
  
 
 
   
 
 
 
Total Innospec stockholders’ equity
     899.2       918.5  
Non-controlling
interest
     0.5       0.4  
  
 
 
   
 
 
 
Total equity
     899.7       918.9  
  
 
 
   
 
 
 
Total liabilities and equity
   $ 1,339.0     $ 1,468.8  
  
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
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INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    
Six Months Ended

June 30
 
(in millions)
  
2020
   
2019
 
Cash Flows from Operating Activities
    
Net (loss)/income
   $ (6.6   $ 51.0  
Adjustments to reconcile net income to net cash provided by operating activities:
    
Depreciation and amortization
     24.2       23.8  
Impairment of intangible assets
     19.8       0.0  
Impairment of tangible assets
     2.0       0.0  
Deferred tax expense
     (5.6     0.1  
Cash contributions to defined benefit pension plans
     0.0       (0.5
Non-cash
movements on defined benefit pension plans
     (2.2     (3.1
Stock option compensation
     2.8       3.2  
Changes in assets and liabilities, net of effects of acquired and divested companies:
    
Trade and other accounts receivable
     76.2       (0.7
Inventories
     (2.1     (0.1
Prepaid expenses
     3.9       (0.2
Accounts payable and accrued liabilities
     (79.6     (10.4
Accrued income taxes
     (9.5     (0.6
Plant closure provisions
     8.5       0.0  
Unrecognized tax benefits
     (1.3     0.7  
Other assets and liabilities
     1.7       0.0  
  
 
 
   
 
 
 
Net cash provided by operating activities
     32.2       63.2  
Cash Flows from Investing Activities
    
Capital expenditures
     (14.6     (16.2
Internally developed software
     0.0       (0.7
  
 
 
   
 
 
 
Net cash used in investing activities
     (14.6     (16.9
Cash Flows from Financing Activities
    
Non-controlling
interest
     0.1       0.0  
Proceeds from revolving credit facility
     15.0       23.0  
Repayments of revolving credit facility
     (35.0     (73.0
Receipt of short-term borrowing
     0.0       0.7  
Repayments of finance leases
     (0.6     (0.9
Dividend paid
     (12.8     (12.2
Issue of treasury stock
     0.8       1.3  
Repurchase of common stock
     (2.1     (2.1
  
 
 
   
 
 
 
Net cash used in financing activities
     (34.6     (63.2
Effect of foreign currency exchange rate changes on cash
     (0.5     (0.1
  
 
 
   
 
 
 
Net change in cash and cash equivalents
     (17.5     (17.0
Cash and cash equivalents at beginning of period
     75.7       123.1  
  
 
 
   
 
 
 
Cash and cash equivalents at end of period
   $ 58.2     $ 106.1  
  
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
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INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
 
(in millions)
  
Common

Stock
    
Additional

Paid-In

Capital
   
Treasury

Stock
   
Retained

Earnings
   
Accumulated

Other

Comprehensive

Loss
   
Non-

Controlling
Interest
    
Total

Equity
 
Balance at December 31, 2019
   $ 0.3      $ 330.4     $ (93.3   $ 755.5     $ (74.4   $ 0.4      $ 918.9  
Net income
            (6.6          (6.6
Dividend paid
($0.52 per share)
            (12.8          (12.8
Changes in cumulative translation adjustment, net of tax
              (2.4        (2.4
Share of net income
                0.1        0.1  
Treasury stock reissued
        (0.2     1.6              1.4  
Treasury stock repurchased
          (2.1            (2.1
Stock option compensation
        2.8                2.8  
Amortization of prior service credit, net of tax
              (0.4        (0.4
Amortization of actuarial net losses, net of tax
              0.8          0.8  
  
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
    
 
 
 
Balance at June 30, 2020
   $ 0.3      $ 333.0     $ (93.8   $ 736.1     $ (76.4   $ 0.5      $ 899.7  
  
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
    
 
 
 
 
(in millions)
  
Common

Stock
    
Additional

Paid-In

Capital
   
Treasury

Stock
   
Retained

Earnings
   
Accumulated

Other

Comprehensive
Loss
   
Non-

Controlling
Interest
   
Total

Equity
 
Balance at December 31, 2018
   $ 0.3      $ 324.9     $ (92.8   $ 668.3     $ (75.7   $ 0.5     $ 825.5  
Net income
            51.0           51.0  
Dividend paid
($0.52 per share)
            (12.2         (12.2
Changes in cumulative translation adjustment, net of tax
              (1.6       (1.6
Changes in unrealized gains on derivative instruments, net of tax
              (1.2       (1.2
Share of net income
                (0.1     (0.1
Treasury stock reissued
        (0.4     1.5             1.1  
Treasury stock repurchased
          (2.1           (2.1
Stock option compensation
        3.2               3.2  
Amortization of prior service credit, net of tax
              (0.5       (0.5
  
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance at June 30, 2019
   $ 0.3      $ 327.7     $ (93.4   $ 707.1     $ (79.0   $ 0.4     $ 863.1  
  
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
 
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INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
 
(in millions)
  
Common

Stock
    
Additional

Paid-In

Capital
    
Treasury

Stock
   
Retained

Earnings
   
Accumulated

Other

Comprehensive
Loss
   
Non-

Controlling
Interest
    
Total

Equity
 
Balance at March 31, 2020
   $ 0.3      $ 331.2      $ (94.0   $ 788.6     $ (82.3   $ 0.5      $ 944.3  
Net income
             (39.7          (39.7
Dividend paid
($0.52 per share)
             (12.8          (12.8
Changes in cumulative translation adjustment, net of tax
               5.5          5.5  
Treasury stock reissued
        0.2        0.2              0.4  
Stock option compensation
        1.6                 1.6  
Amortization of prior service credit, net of tax
               (0.2        (0.2
Amortization of actuarial net losses, net of tax
               0.6          0.6  
  
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
    
 
 
 
Balance at June 30, 2020
   $ 0.3      $ 333.0      $ (93.8   $ 736.1     $ (76.4   $ 0.5      $ 899.7  
  
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
    
 
 
 
 
(in millions)
  
Common

Stock
    
Additional

Paid-In

Capital
    
Treasury

Stock
   
Retained

Earnings
   
Accumulated

Other

Comprehensive

Loss
   
Non-

Controlling
Interest
   
Total

Equity
 
Balance at March 31, 2019
   $ 0.3      $ 326.0      $ (93.5   $ 697.0     $ (81.4   $ 0.5     $ 848.9  
Net income
             22.3           22.3  
Dividend paid
($0.52 per share)
             (12.2         (12.2
Changes in cumulative translation adjustment, net of tax
               3.4         3.4  
Changes in unrealized gains on derivative instruments, net of tax
               (0.7       (0.7
Share of net income
                 (0.1     (0.1
Treasury stock reissued
        0.1        0.3             0.4  
Treasury stock repurchased
           (0.2           (0.2
Stock option compensation
        1.6                1.6  
Amortization of prior service credit, net of tax
               (0.3       (0.3
  
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance at June 30, 2019
   $ 0.3      $ 327.7      $ (93.4   $ 707.1     $ (79.0   $ 0.4     $ 863.1  
  
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
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INNOSPEC INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form
10-Q
and Article 10 of Regulation
S-X
under the Securities Exchange Act of 1934. Accordingly, they do not include all the information and notes necessary for a comprehensive presentation of financial position, results of operations and cash flows.
It is our opinion, however, that all adjustments (consisting of normal, recurring adjustments, unless otherwise disclosed) have been made which are necessary for the condensed consolidated financial statements to be fairly stated. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2019 filed on February 19, 2020 (the “2019 Form
10-K”).
The results for the interim period covered by this report are not necessarily indicative of the results to be expected for the full year.
When we use the terms “Innospec,” “the Corporation,” “the Company,” “Registrant,” “we,” “us” and “our,” we are referring to Innospec Inc. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.
Credit losses
With an effective date of January 1, 2020, we have applied Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (ASC Topic 326). This replaces the incurred loss impairment methodology under previous GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
The standard was adopted using prospective application and principally impacts the allowance for trade and other accounts receivables. Upon adoption, there was no adjustment made to opening retained earnings as at January 1, 2020. As a result of implementing the standard, the Company did not recognize any material change to the allowance within trade and other accounts receivable as at January 1, 2020. Trade
and
 other accounts receivable are shown net of a $4.3 million allowance at June 30, 2020. The allowance remains immaterial to the financial statements.
The Company is exposed to credit losses primarily through sales of products. The Company’s expected loss allowance methodology for trade and other accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers’ receivables. Due to the short-term nature
of
 such receivables, the estimate of accounts receivable amounts that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, a further allowance is included to account for the Company’s historic track record of credit losses, for balances which are not aged sufficiently to be considered under the aging based approach.
 
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The Company considered the current and expected future economic
and
 market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted.
NOTE 2 – SEGMENT REPORTING
The Company reports its financial performance based on the following four reportable segments: Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives.
The Fuel Specialties, Performance Chemicals and Oilfield Services segments operate in markets where we actively seek growth opportunities although their ultimate customers are different. The Company expects that the Octane Additives segment will not make any further sales and will cease to be a reporting segment from January 1, 2021, see Note 4 of the Notes to the Condensed Consolidated Financial Statements for further information.
The Company evaluates the performance of its segments based on operating income. The following tables analyze sales and other financial information by the Company’s reportable segments:
 
    
Three Months Ended

June 30
    
Six Months Ended

June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Net Sales:
           
Refinery and Performance
   $ 74.9      $ 95.2      $ 183.5      $ 212.5  
Other
     32.5        38.1        70.9        76.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Fuel Specialties
     107.4        133.3        254.4        289.3  
  
 
 
    
 
 
    
 
 
    
 
 
 
Personal Care
     49.8        54.9        112.8        115.9  
Home Care
     21.3        23.1        42.9        50.1  
Other
     24.6        26.7        53.1        56.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Performance Chemicals
     95.7        104.7        208.8        222.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Oilfield Services
     41.8        122.5        154.0        236.7  
Octane Additives
     0.0        1.9        0.0        1.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
    $
244.9
     $
362.4
     $617.2      $750.7  
  
 
 
    
 
 
    
 
 
    
 
 
 
Gross profit/(loss):
               
Fuel Specialties
   $ 25.4      $ 44.7      $ 76.6      $ 100.4  
Performance Chemicals
     24.9        24.0        52.5        50.6  
Oilfield Services
     9.9        41.5        46.1        79.2  
Octane Additives
     (1.1      0.9        (2.2      (1.3
  
 
 
    
 
 
    
 
 
    
 
 
 
     $
59.1
     $
111.1
     $173.0      $228.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
Operating income/(loss):
               
Fuel Specialties
   $ 4.7      $ 24.1      $ 36.8      $ 57.0  
Performance Chemicals
     12.2        11.0        27.8        24.5  
Oilfield Services
     (12.4      10.1        (5.2      17.9  
Octane Additives
     (1.6      0.1        (2.8      (2.7
Corporate costs
     (15.4      (13.6      (28.2      (28.8
Restructuring charge
     (21.1      0.0        (21.1      0.0  
Impairment of intangible assets
     (19.8      0.0        (19.8      0.0  
  
 
 
    
 
 
    
 
 
    
 
 
 
Total operating
(loss)/
income
   $ (53.4    $ 31.7      $ (12.5    $ 67.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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NOTE 3 – EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the effect of options that are dilutive and outstanding during the period under the treasury stock method. Per share amounts are computed as follows:
 
    
Three Months Ended

June 30
    
Six Months Ended

June 30
 
    
2020
   
2019
    
2020
   
2019
 
Numerator (in millions):
         
Net
 
(loss)/
income available to common stockholders
   $ (39.7   $ 22.3      $ (6.6   $ 51.0  
  
 
 
   
 
 
    
 
 
   
 
 
 
Denominator (in thousands):
         
Weighted average common shares outstanding
     24,564       24,483        24,547       24,468  
Dilutive effect of stock options and awards
     0       195        0       203  
  
 
 
   
 
 
    
 
 
   
 
 
 
Denominator for diluted earnings per share
     24,564       24,678        24,547       24,671  
  
 
 
   
 
 
    
 
 
   
 
 
 
Net
 
(loss)/
income per share, basic:
   $ (1.62   $ 0.91      $ (0.27   $ 2.08  
  
 
 
   
 
 
    
 
 
   
 
 
 
Net
 
(loss)/
income per share, diluted:
   $ (1.62   $ 0.90      $ (0.27   $ 2.07  
  
 
 
   
 
 
    
 
 
   
 
 
 
In the three and six months ended June 30, 2020, the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were 0 and 0, respectively (three and six months ended June 30, 2019 – 12,539 and 212,095, respectively).
NOTE 4 – RESTRUCTURING
During the quarter ended June 30, 2020, the Company has recorded provisions of $21.1 million for the restructuring of its Octane Additives segment in line with the end of the manufacturing and sale of tetra ethyl lead (“TEL”) for use in motor gasoline. The Company expects that the Octane Additives segment will not make
 any
further sales
and will cease to be a reporting segment from January 1, 2021
. Production of TEL will continue for sales to the aviation market, as reported within our Fuel Specialties segment.
The provisions comprise the future committed costs of environmental monitoring
 
of $2.0 million,
remediation of facilities of $7.5 million, provision for
 
a
 
loss making contract of $7.2 million, impairment of tangible assets of $2.0 million and costs of redundancy due to the
down-sizing
of the TEL operations of $2.4 million.
 
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NOTE 5 – GOODWILL
The following table summarizes the goodwill movements:
 
(in millions)
  
Gross Cost
    
Accumulated
Impairment
Losses
    
Net Book
Amount
 
Opening balance at January 1
   $ 599.5      $ (236.5    $ 363.0  
Exchange effect
     0.3        0.0        0.3  
  
 
 
    
 
 
    
 
 
 
Closing balance at June 30
   $ 599.8      $ (236.5    $ 363.3  
  
 
 
    
 
 
    
 
 
 
NOTE 6 – OTHER INTANGIBLE ASSETS
The following table summarizes the other intangible assets movements:
 
(in millions)
  
2020
 
Gross cost at January 1
   $ 294.8  
Exchange effect
     0.1  
  
 
 
 
Gross cost at June 30
     294.9  
  
 
 
 
Accumulated amortization at January 1
     (181.3
Amortization expense
     (11.5
Impairment
     (19.8
Exchange effect
     0.0  
  
 
 
 
Accumulated amortization at June 30
     (212.6
  
 
 
 
Net book amount at June 30
   $ 82.3  
  
 
 
 
During the quarter ended June 30, 2020, the Company impaired the intangible assets arising from the acquisition of Strata Control Services Inc., which forms part of our Oilfield Services segment. The impairment review was triggered by the reduction in demand for drilling related products. A discounted cash flow analysis was performed to determine the fair value of the assets, linked to the down turn in the results of that segment. The impaired assets relate to technology ($10.0 million) and customer relationships ($9.8 million).
The amortization expense for the six months ended June 30, 2020 was $11.5 million (six months ended June 30, 2019 – $11.5 million).
The net book amount by category of other intangible assets is shown in the following table:
 
(in millions)
  
June 30

2020
    
December 31

2019
 
Product rights
   $ 8.2      $ 10.1  
Brand names
     2.6        2.9  
Technology
     20.9        32.6  
Customer relationships
     45.8        60.8  
Internally developed software
     4.8        7.1  
  
 
 
    
 
 
 
   $ 82.3      $ 113.5  
  
 
 
    
 
 
 
 
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NOTE 7 – PENSION AND POST EMPLOYMENT BENEFITS
The Company maintains a defined benefit pension plan (the “Plan”) covering a number of its current and former employees in the United Kingdom, although it does also have other much smaller pension arrangements in the U.S. and overseas. The Plan is closed to future service accrual but has a large number of deferred and current pensioners.
The net service cost for the three and six months ended June 30, 2020 was $0.3 million and $0.6 million respectively (three and six months ended June 30, 2019 – $0.3 million and $0.5 million respectively) and has been recognized in selling, general and administrative expenses within corporate costs. The following table shows the income statement effect recognized within other income, net:
 
    
Three Months Ended

June 30
    
Six Months Ended
June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Plan net pension credit/(charge):
           
Interest cost on projected benefit obligation
   $ (2.7    $ (3.9    $ (5.5    $ (7.8
Expected return on plan assets
     4.3        5.5        8.8        11.1  
Amortization of prior service credit
     0.2        0.3        0.4        0.5  
Amortization of actuarial net losses
     (0.2      0.0        (0.4      0.0  
  
 
 
    
 
 
    
 
 
    
 
 
 
   $ 1.6      $ 1.9      $ 3.3      $ 3.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
The amortization of prior service credit and actuarial net losses is a reclassification out of accumulated other comprehensive loss into other income and expense.
The Company also maintains an unfunded defined benefit pension plan covering a number of its current and former employees in Germany (the “German plan”) within our Fuel Specialties segment. The German plan is closed to new entrants and has no assets. The net service cost for the German plan for the three and six months ended June 30, 2020 was $0.1 million and $0.1 million respectively (three and six months ended June 30, 2019 – $0.1 million and $0.1 million respectively) and has been recognized in selling, general and administrative expenses. The following table shows the income statement effect recognized within other income and expense:
 
    
Three Months Ended
June 30
    
Six Months Ended

June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Plan net pension charge:
           
Interest cost on projected benefit obligation
   $ 0.0      $ 0.0      $ (0.1    $ (0.1
Amortization of actuarial net losses
     (0.3      0.0        (0.4      (0.1
  
 
 
    
 
 
    
 
 
    
 
 
 
   $ (0.3    $ 0.0      $ (0.5    $ (0.2
  
 
 
    
 
 
    
 
 
    
 
 
 
As at June 30, 2020, our Performance Chemicals segment has obligations for post-employment benefits in its European businesses with a liability of $4.6 million (December 31, 2019 – $4.5 million).
 
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NOTE 8 – INCOME TAXES
A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:
 
(in millions)
  
Unrecognized
Tax Benefits
    
Interest and
Penalties
    
Total
 
Opening balance at January 1
   $ 14.4      $ 2.0      $ 16.4  
Net change
 
for tax positions of prior periods
     (1.2      0.0        (1.2
  
 
 
    
 
 
    
 
 
 
Closing balance at June 30
     13.2        2.0        15.2  
Current
     0.0        0.0        0.0  
  
 
 
    
 
 
    
 
 
 
Non-current
   $ 13.2      $ 2.0      $ 15.2  
  
 
 
    
 
 
    
 
 
 
All of the $15.2 million of unrecognized tax benefits, interest and penalties would impact our effective tax rate if recognized.
As previously disclosed, a
non-U.S.
subsidiary, Innospec Performance Chemicals Italia Srl, is subject to an ongoing tax audit in relation to the period 2011 to 2014 inclusive. The Company has determined that additional tax, interest and penalties totaling $3.1 million may arise as a consequence of the tax audit. This includes a reduction in interest accrued of $0.2 million recorded in the six months to June 30, 2020. As any additional tax arising as a consequence of the tax audit would be reimbursed by the previous owner under the terms of the sale and purchase agreement, an indemnification asset of the same amount is recorded in the financial statements to reflect this arrangement.
As previously disclosed, in 2018 the Company recorded an unrecognized tax benefit
 in
 
relation
 
to a potential adjustment that could arise as a consequence of the Tax Cuts and Jobs Act, but for which retrospective adjustment to the filed 2017 U.S. federal income tax returns was not permissible. The Company
 
has determined that additional tax, interest and penalties totaling $12.1 million may arise in relation to this item. This includes
 
an
 
increase in interest
 
accr
u
ed
 
of $0.4 million in the six months to June 30, 2020
.
In 2015, the Company recorded an unrecognized tax benefit of $1.2 million in relation to additional tax that could have arisen if a historical impairment in value of certain of the Company’s
non-U.S.
subsidiaries was reversed upon challenge by the tax authorities. The Company has released the provision of $1.2 million in full, together with accrued interest of $0.2 million thereon, in the three months ended June 30, 2020, following a review of the value of the Company’s investments that confirmed the historical impairment in value undertaken in 2005 was appropriate.
The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2016 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Germany (2015 onwards), Switzerland (2015 onwards), Spain (2016 onwards), France (2017 onwards) and the United Kingdom (2018 onwards).
 
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NOTE 9 – LONG-TERM DEBT
Long-term debt consists of the following:
 
(in millions)
  
June 30,

2020
    
December 31,

2019
 
Revolving credit facility
   $ 40.0      $ 60.0  
Deferred finance costs
     (1.2      (1.4
  
 
 
    
 
 
 
     38.8        58.6  
Less current portion
     0.0        0.0  
  
 
 
    
 
 
 
   $ 38.8      $ 58.6  
  
 
 
    
 
 
 
NOTE 10 – PLANT CLOSURE PROVISIONS
The Company has continuing plans to close some of its manufacturing facilities at sites around the world as and when those operations are expected to be decommissioned. The liability for estimated closure costs of Innospec’s manufacturing facilities includes costs for decontamination and environmental remediation activities (“remediation”).
As a result, the principal site giving rise to remediation liabilities is the manufacturing site at Ellesmere Port in the United Kingdom. There are also remediation liabilities on a much smaller scale in respect of our other manufacturing sites in the U.S. and Europe.
Movements in the provisions are summarized as follows:
 
(in millions)
  
2020
 
Total at January 1
   $ 49.3  
Charge for the period
     9.8  
Utilized in the period
     (1.3
Exchange effect
     0.1  
  
 
 
 
Total at June 30
     57.9  
Due within one year
     (6.3
  
 
 
 
Due after one year
   $ 51.6  
  
 
 
 
The charge for the six months ended June 30, 2020 was $9.8 million (six months ended June 30, 2019 – $2.1 million). This includes $7.5 million of additional provisions as a result of the restructuring activities following the cessation of sales of TEL for use in motor gasoline (see Note 4 of the Notes to the Condensed Consolidated Financial Statements for further information).
Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date.
 
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NOTE 11 – FAIR VALUE MEASUREMENTS
The following table presents the carrying amount and fair values of the Company’s financial assets and liabilities measured on a recurring basis:
 
    
June 30, 2020
    
December 31, 2019
 
(in millions)
  
Carrying

Amount
    
Fair

Value
    
Carrying

Amount
    
Fair

Value
 
Assets
           
Non-derivatives:
           
Cash and cash equivalents
   $ 58.2      $ 58.2      $ 75.7      $ 75.7  
Derivatives (Level 1 measurement):
           
Other current and
non-current
assets:
           
Foreign currency forward exchange contracts
     0.0        0.0        0.8        0.8  
Liabilities
           
Non-derivatives:
           
Long-term debt (including current portion)
   $ 38.8      $ 38.8      $ 58.6      $ 58.6  
Finance leases (including current portion)
     0.8        0.8        1.5        1.5  
Derivatives (Level 1 measurement):
           
Other current and
non-current
liabilities:
           
Foreign currency forward exchange contracts
     0.6        0.6        0.0        0.0  
Non-financial
liabilities (Level 3 measurement):
           
Other current and
non-current
liabilities:
           
Stock equivalent units
     14.5        14.5        24.6        24.6  
The following methods and assumptions were used to estimate the fair values of financial instruments:
Cash and cash equivalents:
The carrying amount approximates fair value because of the short-term maturities of such instruments.
Derivatives:
The fair value of derivatives relating to foreign currency forward exchange contracts are derived from current settlement prices and comparable contracts using current assumptions. Foreign currency forward exchange contracts primarily relate to contracts entered into to hedge future known transactions or hedge balance sheet net cash positions. The movements in the carrying amounts and fair values of these contracts are largely due to changes in exchange rates against the U.S. dollar.
Long-term debt and finance leases:
Long-term debt comprises the revolving credit facility, which is shown net of deferred finance costs that have been capitalized. Finance leases relate to certain fixed assets in our Fuel Specialties and Oilfield Services segments. The carrying amount of long-term debt and finance leases approximates to the fair value.
Stock equivalent units:
The fair values of stock equivalent units are calculated at each balance sheet date using either the Black-Scholes or Monte Carlo method depending on the terms of each grant.
 
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NOTE 12 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT
The Company enters into various foreign currency forward exchange contracts to minimize currency exchange rate exposure from expected future cash flows. As at June 30, 2020 the contracts have maturity dates of up to twelve months at the date of inception. These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for the first six months of 2020 was a gain of $1.8 million (first six months of 2019: gain of $1.0 million).
As at June 30, 2020 and December 31, 2019 the Company did not hold any interest rate swaps. In prior years, the Company entered into interest rate swaps to minimize interest rate exposure related to a portion of its borrowing requirements. These interest rate swaps were designated as hedging instruments, and their impact on accumulated other comprehensive loss for the first six months of 2019 was a loss of $1.5 million.
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Legal matters
While we are involved from time to time in claims and legal proceedings that result from, and are incidental to, the conduct of our business including business and commercial litigation, employee and product liability claims, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their property is subject. It is possible, however, that an adverse resolution of an unexpectedly large number of such individual claims or proceedings could in the aggregate have a material adverse effect on the results of operations for a particular year or quarter.
Guarantees
The Company and certain of the Company’s consolidated subsidiaries are contingently liable for certain obligations of affiliated companies primarily in the form of guarantees of debt and performance under contracts entered into as a normal business practice. This includes guarantees of
non-U.S.
excise taxes and customs duties. As at June 30, 2020, such guarantees which are not recognized as liabilities in the condensed consolidated financial statements amounted to $4.9 million (December 31, 2019 - $4.7 million). The remaining terms of the fixed maturity guarantees vary from 1 month to 4 years, with some further guarantees having no fixed expiry date.
Under the terms of the guarantee arrangements, generally the Company would be required to perform should the affiliated company fail to fulfill its obligations under the arrangements. In some cases, the guarantee arrangements have recourse provisions that would enable the Company to recover any payments made under the terms of the guarantees from securities held of the guaranteed parties’ assets.
The Company and its affiliates have numerous long-term sales and purchase commitments in their various business activities, which are expected to be fulfilled with no adverse consequences material to the Company.
 
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NOTE 14 – STOCK-BASED COMPENSATION PLANS
The Company grants stock options and stock equivalent units (“SEUs”) from time to time as a long-term performance incentive. In certain cases the grants are subject to performance conditions such as the Company’s stock price. Where performance conditions apply the Monte Carlo simulation model is used to determine the fair values. Otherwise the Black-Scholes model is used to determine the fair values.
Stock option plans
The following table summarizes the transactions of the Company’s stock option plans for the six months ended June 30, 2020:
 
    
Number of

Options
    
Weighted
Average
Exercise
Price
    
Weighted
Average
Grant-Date

Fair Value
 
Outstanding at December 31, 2019
     504,459      $ 33.05      $ 41.35  
Granted - at discount
     63,950      $ 1.11      $ 76.80  
              - at market value
     10,419      $ 95.70      $ 18.69  
Exercised
     (81,860    $ 9.73      $ 52.31  
Forfeited
     (13,161    $ 22.43      $ 45.20  
  
 
 
       
Outstanding at June 30, 2020
     483,807      $ 34.41      $ 43.59  
  
 
 
       
At June 30, 2020, there were 43,638 stock options that were exercisable, of which 8,779 had performance conditions attached.
The stock option compensation cost for the first six months of 2020 was $2.8 million (first six months of 2019 – $3.2 million). The total intrinsic value of options exercised in the first six months of 2020 was $4.6 million (first six months of 2019 – $2.7 million).
The total compensation cost related to
non-vested
stock options not yet recognized at June 30, 2020 was $10.2 million and this cost is expected to be recognized over the weighted-average period of 1.93 years.
Stock equivalent units
The following table summarizes the transactions of the Company’s SEUs for the six months ended June 30, 2020:
 
    
Number
of SEUs
    
Weighted
Average
Exercise
Price
    
Weighted

Average
Grant-Date

Fair Value
 
Outstanding at December 31, 2019
     390,816      $ 3.69      $ 59.91  
Granted - at discount
     108,607      $ 0.00      $ 76.86  
              - at market value
     3,634      $ 95.70      $ 18.69  
Exercised
     (88,557    $ 0.86      $ 60.55  
Forfeited
     (17,036    $ 0.86      $ 65.38  
  
 
 
       
Outstanding at June 30, 2020
     397,464      $ 4.27      $ 63.79  
  
 
 
       
 
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At June 30, 2020 there were 57,696 SEUs that are exercisable, of which 51,164 had performance conditions attached.
The charges for SEUs are spread over the life of the award subject to a revaluation to fair value each quarter. The revaluation may result in a charge or a credit to the income statement in the quarter dependent upon our share price and other performance criteria.
The SEU compensation for the first six months of 2020 was a $3.0 million credit (first six months of 2019 – $11.8 million charge). The total intrinsic value of SEUs exercised in the first six months of 2020 was $6.1 million (first six months of 2019 – $7.1 million).
The weighted-average remaining vesting period of
non-vested
SEUs is 2.20 years.
 
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NOTE 15 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS
Reclassifications out of accumulated other comprehensive loss for the first six months of 2020 were:
 
(in millions)
Details about AOCL Components
  
Amount
Reclassified
from AOCL
    
Affected Line Item in the
Statement where
Net Income is Presented
Defined benefit pension plan items:
     
Amortization of prior service credit
   $ (0.4    See 
(1)
 below
Amortization of actuarial net losses
     0.8      See 
(1)
 below
  
 
 
    
     0.4      Total before tax
     0.0      Income tax expense
  
 
 
    
Total reclassifications
   $ 0.4      Net of tax
  
 
 
    
 
(1)
These items are included in other income and expense. See Note 7 of the Notes to the Condensed Consolidated    Financial Statements for additional information.
Changes in accumulated other comprehensive loss for the first six months of 2020, net of tax, were:
 
(in millions)
  
Defined
Benefit
Pension
Plan Items
    
Cumulative
Translation
Adjustments
    
Total
 
Balance at December 31, 2019
   $ (9.3    $ (65.1    $ (74.4
  
 
 
    
 
 
    
 
 
 
Other comprehensive income before reclassifications
     0.0        (2.4      (2.4
Amounts reclassified from AOCL
     0.4        0.0        0.4  
  
 
 
    
 
 
    
 
 
 
Total other comprehensive income
     0.4        (2.4      (2.0
  
 
 
    
 
 
    
 
 
 
Balance at June 30, 2020
   $ (8.9    $ (67.5    $ (76.4
  
 
 
    
 
 
    
 
 
 
 
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NOTE 16 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (ASU)
No. 2019-12,
Simplifying the
Accounting
for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company’s disclosures.
NOTE 17 – RELATED PARTY TRANSACTIONS
Mr. Patrick S. Williams has been an executive director of the Company since April 2009 and has been a
non-executive
director of AdvanSix, a chemicals manufacturer, since February 2020. In the first six months of 2020 the Company purchased product from AdvanSix for $0.2 million. As at June 30, 2020, the Company owed $0.0 million to AdvanSix.
Mr. Robert I. Paller has been a
non-executive
director of the Company since November 1, 2009. The Company has retained and continues to retain Smith, Gambrell & Russell, LLP (“SGR”), a law firm with which Mr. Paller holds a position. In the first six months of 2020 the Company incurred fees from SGR of $0.2 million (first six months of 2019 – $0.4 million). As at June 30, 2020, the Company owed $0.0 million to SGR (December 31, 2019 – $0.0 million).
Mr. David F. Landless has been a
non-executive
director of the Company since January 1, 2016 and is a
non-executive
director of Ausurus Group Limited which owns European Metal Recycling Limited (“EMR”). The Company has sold scrap metal to EMR in the first six months of 2020 for a value of $0.0 million (first six months of 2019 – $0.0 million). A tendering process is operated periodically to select the best buyer for the sale of scrap metal by the Company. As at June 30, 2020 EMR owed $0.0 million for scrap metal purchased from the Company (December 31, 2019 – $0.0 million).
 
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Item 2    Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six Months Ended June 30, 2020
This discussion should be read in conjunction with our unaudited interim condensed consolidated financial statements and the notes thereto.
CRITICAL ACCOUNTING ESTIMATES
The policies and estimates that the Company considers the most critical in terms of complexity and subjectivity of assessment are those related to environmental liabilities, pensions, income taxes, goodwill and property, plant and equipment and other intangible assets (net of depreciation and amortization). These policies have been discussed in the Company’s 2019 Form
10-K.
Impact of
COVID-19
Pandemic and Current Economic Environment
As anticipated in our Form 10-Q for the quarter ending March 31, 2020, there has been a significant impact in the Company’s results during the second quarter of 2020, due to the COVID-19 pandemic and global economic environment. Fuel Specialties have been impacted by reduced demand stemming from the reduction in freight transport and passenger miles and the widespread grounding of aircraft for the majority of the quarter. We expect demand will start to improve, to the extent global lockdowns are eased and economic activity recovers. Performance Chemicals have experienced little overall impact from the pandemic as increased demand for certain products linked to health, hygiene and cleaning outweighed some lost revenues linked to the short-term shutdown of some of our customers manufacturing facilities. Oilfield Services have been heavily impacted by the reduction in oil exploration and production as the wider industry reacts to the reduction in demand and low oil price. We have taken the measure of reducing headcount within this business and we have also impaired some intangible assets (see Note 6 of the Notes to the Condensed Consolidated Financial Statements for further information). We do not know how long this downturn will last and the rate of recovery will depend heavily on the rate and extent to which the government restrictions on movement continue to be lifted.
Our manufacturing facilities have continued to operate with only some minor interruption, and we expect them to continue to do so. We have implemented flexible working, including working from home for our employees where possible, in line with advice and rules in each of the jurisdictions in which we operate. Raw material sourcing has not been significantly impacted and we do not expect that to change over the remainder of the year. Logistics are operating with some delays but our products are currently being delivered to our customers.
Our financial position remains strong. We have sufficient access to capital if needed, including our $250 million revolving credit facility we entered into in September 2019, and we do not anticipate any issues with meeting the covenants for our debt agreements. Our major capital projects are continuing to progress as planned.
As we operate in the chemical industry, we continue to be focused on protecting the health and safety of our employees and have procedures in place at each of our operating facilities to help ensure their well-being.
We do not know how long the current economic environment will continue and while we have made estimates as to potential impacts on our financial position and operations, the ultimate impact on our business will depend on many factors which are very difficult to predict with certainty and substantially beyond our control.
 
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RESULTS OF OPERATIONS
The Company currently reports its financial performance based on the following four reportable segments: Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives. The Company expects that the Octane Additives segment will not make any further sales and will cease to be a reporting segment from January 1, 2021.
The following table provides operating income by reporting segment:
 
    
Three Months Ended
June 30
    
Six Months Ended
June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Net sales:
          
Fuel Specialties
   $ 107.4      $ 133.3      $ 254.4     $ 289.3  
Performance Chemicals
     95.7        104.7        208.8       222.8  
Oilfield Services
     41.8        122.5        154.0       236.7  
Octane Additives
     0.0        1.9        0.0       1.9  
  
 
 
    
 
 
    
 
 
   
 
 
 
   $ 244.9      $ 362.4      $ 617.2     $ 750.7  
  
 
 
    
 
 
    
 
 
   
 
 
 
Gross profit/(loss):
          
Fuel Specialties
   $ 25.4      $ 44.7      $ 76.6     $ 100.4  
Performance Chemicals
     24.9        24.0        52.5       50.6  
Oilfield Services
     9.9        41.5        46.1       79.2  
Octane Additives
     (1.1      0.9        (2.2     (1.3
  
 
 
    
 
 
    
 
 
   
 
 
 
   $ 59.1      $ 111.1      $ 173.0     $ 228.9  
  
 
 
    
 
 
    
 
 
   
 
 
 
Operating income/(loss):
          
Fuel Specialties
   $ 4.7      $ 24.1        36.8       57.0  
Performance Chemicals
     12.2        11.0        27.8       24.5  
Oilfield Services
     (12.4      10.1        (5.2     17.9  
Octane Additives
     (1.6      0.1        (2.8     (2.7
Corporate costs
     (15.4      (13.6      (28.2     (28.8
Restructuring charge
     (21.1      0.0        (21.1     0.0  
Impairment of intangible assets
     (19.8      0.0        (19.8     0.0  
  
 
 
    
 
 
    
 
 
   
 
 
 
Total operating (loss)/income
   $ (53.4    $ 31.7      $ (12.5   $ 67.9  
  
 
 
    
 
 
    
 
 
   
 
 
 
 
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Table of Contents
Three Months Ended June 30, 2020
The following table shows the change in components of operating income by reporting segment for the three months ended June 30, 2020 and the three months ended June 30, 2019:
 
    
Three Months Ended
June 30
              
(in millions, except ratios)
  
2020
    
2019
    
Change
       
Net sales:
          
Fuel Specialties
   $ 107.4      $ 133.3      $ (25.9     -19
Performance Chemicals
     95.7        104.7        (9.0     -9
Oilfield Services
     41.8        122.5        (80.7     -66
Octane Additives
     0.0        1.9        (1.9     -100
  
 
 
    
 
 
    
 
 
   
   $ 244.9      $ 362.4      $ (117.5     -32
  
 
 
    
 
 
    
 
 
   
Gross profit/(loss):
          
Fuel Specialties
   $ 25.4      $ 44.7      $ (19.3     -43
Performance Chemicals
     24.9        24.0        0.9       +4
Oilfield Services
     9.9        41.5        (31.6     -76
Octane Additives
     (1.1      0.9        (2.0     -222
  
 
 
    
 
 
    
 
 
   
   $ 59.1      $ 111.1      $ (52.0     -47
  
 
 
    
 
 
    
 
 
   
Gross margin (%):
          
Fuel Specialties
  
 
23.6
 
  
 
33.5
 
  
 
-9.9
 
 
Performance Chemicals
  
 
26.0
 
  
 
22.9
 
  
 
+3.1
 
 
Oilfield Services
  
 
23.7
 
  
 
33.9
 
  
 
-10.2
 
 
Octane Additives
  
 
n/a
 
  
 
47.4
 
  
 
n/a
 
 
Aggregate
  
 
24.1
 
  
 
30.7
 
  
 
-6.6
 
 
Operating expenses:
        
Fuel Specialties
   $ (20.7    $ (20.6    $ (0.1     0
Performance Chemicals
     (12.7      (13.0      0.3       -2
Oilfield Services
     (22.3      (31.4      9.1       -29
Octane Additives
     (0.5      (0.8      0.3       -38
Corporate costs
     (15.4      (13.6      (1.8     +13
Restructuring charge
     (21.1      0.0        (21.1     n/a  
Impairment of intangible assets
     (19.8      0.0        (19.8     n/a  
  
 
 
    
 
 
    
 
 
   
   $ (112.5    $ (79.4    $ 33.1       +42
  
 
 
    
 
 
    
 
 
   
 
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Fuel Specialties
Net sales:
the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:
 
    
Three Months Ended June 30, 2020
 
Change (%)
  
Americas
    
EMEA
    
ASPAC
    
AvTel
    
Total
 
Volume
     -21        -9        -23        -16        -15  
Price and product mix
     +3        -4        -10        -4        -3  
Exchange rates
     0        -3        0        0        -1  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
     -18        -16        -33        -20        -19  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Volumes in all our regions suffered from the adverse impact of the global COVID-19 pandemic, which reduced demand for fuel additive products. We believe that customer demand will start to recover in the third quarter to the extent that lockdowns in countries around the world are eased. Price and product mix in the Americas was favorable due to a richer sales mix, while price and product mix in the other regions was adverse due to lower sales of higher margin products. AvTel volumes were lower than the prior year due to variations in the demand from customers, together with an adverse price and product mix. EMEA was negatively impacted by exchange rate movements year over year, driven by a weakening of the British pound sterling and the European Union euro against the U.S. dollar.
Gross margin
: the year over year decrease of 9.9 percentage points was due to the impact of the
COVID-19
pandemic reducing the demand for our higher margin products, together with adverse raw material costs and higher provisions for slow moving inventory.
Operating expenses:
the year over year increase of $0.1 million was driven by a higher provision for doubtful debts, being partly offset by a reduction in travel and entertainment expenses as a result of the COVID-19 pandemic.
Performance Chemicals
Net sales:
the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:
 
    
Three Months Ended June 30, 2020
 
Change (%)
  
Americas
    
EMEA
    
ASPAC
    
Total
 
Volume
     +3        -9        +13        -4  
Price and product mix
     -13        0        +3        -4  
Exchange rates
     0        -1        -1        -1  
  
 
 
    
 
 
    
 
 
    
 
 
 
     -10        -10        +15        -9  
  
 
 
    
 
 
    
 
 
    
 
 
 
Higher volumes in the Americas and ASPAC were driven by increased demand for our Personal Care and Home Care products. Volumes were lower in EMEA due to lower demand in Personal Care and Home Care products. The Americas suffered an adverse price and product mix due to increased sales of lower margin products, while ASPAC benefitted from a favorable price and product mix due to increased sales of higher margin products. EMEA and ASPAC were negatively impacted by exchange rate movements year over year, due to a weakening of the British pound sterling and the European Union euro against the U.S. dollar during the quarter.
 
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Gross margin:
the year over year increase of 3.1 percentage points was due to a richer sales mix, the continued benefit of margin improvement projects and the timing of pricing movements for certain raw materials.
Operating expenses:
the year over year decrease of $0.3 million was primarily due to a reduction in travel and entertainment expenses as a result of the
COVID-19
pandemic.
Oilfield Services
Net sales:
the year over year decrease of $80.7 million, or 66 percent, was primarily due to a collapse of customer activity in exploration and production for the US onshore market, as a result of the
COVID-19
pandemic reducing world-wide demand, together with the depressed price of crude oil. The Company hopes the demand for crude oil will begin to recover in the third quarter.
Gross margin:
the year over year decrease of 10.2 percentage points was due to increased inventory provisions as a result of the collapse in demand.
Operating expenses:
the year over year decrease of $9.1 million was driven by the
right-sizing
of the operations to adjust for the reduction in demand caused by the global
COVID-19
pandemic.
Octane Additives
Net sales:
were nil in the second quarter compared to $1.9 million in the second quarter of the prior year. As expected for some time, the production of TEL for use in motor gasoline has now come to an end. The Company expects that the Octane Additives segment will not make any further sales and will cease to be a reporting segment from January 1, 2021.
Gross loss/profit:
was a $1.1 million loss in the second quarter compared to a $0.9 million profit in the second quarter of the prior year. The loss in the current quarter primarily related to the accretion charge on the plant closure provision, being consistent with the first quarter of 2020.
Operating expenses:
the year over year decrease of $0.3 million was a result of management plans to maintain efficient operational activity in line with the cessation of sales and production.
Other Income Statement Captions
Corporate costs:
the year over year increase of $1.8 million was due to higher accruals for long-term performance-based incentive plans and higher spending on information technology following the network security incident in the second quarter of 2019, being partly offset by a reduction in travel and entertainment expenses as a result of the
COVID-19
pandemic.
Restructuring charge:
was $21.1 million in the second quarter of 2020 related to the cessation of production and sales of TEL for use in motor gasoline. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for further information.
 
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Impairment of intangible assets
:
was $19.8 million in the second quarter of 2020 related to acquired intangible assets in our Oilfield Services segment. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for further information.
Other net income:
for the second quarter of 2020 and 2019, included the following:
 
(in millions)
  
2020
    
2019
    
Change
 
.
        
United Kingdom pension credit
   $ 1.6      $ 1.9      $ (0.3
German pension charge
     (0.3      0.0        (0.3
Foreign exchange loss on translation
     (1.1      (2.7      1.6  
Foreign currency forward contracts (loss)/gain
     (0.1      0.8        (0.9
  
 
 
    
 
 
    
 
 
 
   $ 0.1      $ 0.0      $ 0.1  
  
 
 
    
 
 
    
 
 
 
Interest expense, net:
was $0.5 million for 2020 compared to $1.2 million in the prior year, driven by lower average net debt as the business generated cash inflows.
Income taxes:
the effective tax rate was 26.2% and 26.9% in the second quarter of 2020 and 2019, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 23.6% in 2020 compared with 25.6% in 2019. The 2.0% decrease in the adjusted effective rate was primarily due to the fact that a higher proportion of the Company’s profits are being generated in lower tax jurisdictions. The Company believes that this adjusted effective tax rate, a
non-GAAP
financial measure, provides useful information to investors and may assist them in evaluating the Company’s underlying performance and identifying operating trends. In addition, management uses this
non-GAAP
financial measure internally to evaluate the performance of the Company’s operations and for planning and forecasting in subsequent periods.
The following table shows a reconciliation of the GAAP effective tax rate to the adjusted effective tax rate:
 
    
Three Months Ended
June 30
 
(in millions)
  
2020
   
2019
 
(Loss)/income before income taxes
   $ (53.8   $ 30.5  
Indemnification asset regarding tax audit
     (0.5     0.0  
Adjustment for stock compensation
     (1.4     1.1  
Restructuring charge
     21.1       0.0  
Impairment of acquired intangible assets
     19.8       0.0  
  
 
 
   
 
 
 
   $ (14.8   $ 31.6  
  
 
 
   
 
 
 
Income taxes
   $ (14.1   $ 8.2  
Tax on stock compensation
     0.1       0.3  
Adjustment of income tax provision
     1.2       (0.4
Tax on restructuring charge
     4.3       0.0  
Tax on impairment of acquired intangible assets
     4.6       0.0  
Tax on foreign exchange on distribution
     0.4       0.0  
  
 
 
   
 
 
 
   $ (3.5   $ 8.1  
  
 
 
   
 
 
 
GAAP effective tax rate
     26.2     26.9
Adjusted effective tax rate
     23.6     25.6
 
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Six Months Ended June 30, 2020
The following table shows the change in components of operating income by reporting segment for the six months ended June 30, 2020 and the six months ended June 30, 2019:
 
    
Six Months Ended
June 30
               
(in millions, except ratios)
  
2020
    
2019
    
Change
        
Net sales:
           
Fuel Specialties
   $ 254.4      $ 289.3      $ (34.9      -12
Performance Chemicals
     208.8        222.8        (14.0      -6
Oilfield Services
     154.0        236.7        (82.7      -35
Octane Additives
     0.0        1.9        (1.9      -100
  
 
 
    
 
 
    
 
 
    
   $ 617.2      $ 750.7      $ (133.5      -18
  
 
 
    
 
 
    
 
 
    
Gross profit/(loss):
           
Fuel Specialties
   $ 76.6      $ 100.4      $ (23.8      -24
Performance Chemicals
     52.5        50.6        1.9        +4
Oilfield Services
     46.1        79.2        (33.1      -42
Octane Additives
     (2.2      (1.3      (0.9      +69
  
 
 
    
 
 
    
 
 
    
   $ 173.0      $ 228.9      $ (55.9      -24
  
 
 
    
 
 
    
 
 
    
Gross margin (%):
           
Fuel Specialties
  
 
30.1
 
  
 
34.7
 
  
 
-4.6
 
  
Performance Chemicals
  
 
25.1
 
  
 
22.7
 
  
 
+2.4
 
  
Oilfield Services
  
 
29.9
 
  
 
33.5
 
  
 
-3.6
 
  
Octane Additives
    
n/a
      
n/a
      
n/a
    
Aggregate
  
 
28.0
 
  
 
30.5
 
  
 
-2.5
 
  
Operating expenses:
        
Fuel Specialties
   $ (39.8    $ (43.4    $ 3.6        -8
Performance Chemicals
     (24.7      (26.1      1.4        -5
Oilfield Services
     (51.3      (61.3      10.0        -16
Octane Additives
     (0.6      (1.4      0.8        -57
Corporate costs
     (28.2      (28.8      0.6        -2
Restructuring charge
     (21.1      0.0        (21.1      n/a  
Impairment of intangible assets
     (19.8      0.0        (19.8      n/a  
  
 
 
    
 
 
    
 
 
    
   $ (185.5    $ (161.0    $ (24.5      -15
  
 
 
    
 
 
    
 
 
    
 
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Table of Contents
Fuel Specialties
Net sales:
the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:
 
    
Six Months Ended June 30, 2020
 
Change (%)
  
Americas
    
EMEA
    
ASPAC
    
AvTel
    
Total
 
Volume
     -10        -9        -19        +16        -9  
Price and product mix
     +1        -2        -3        -9        -2  
Exchange rates
     0        -3        0        0        -1  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
     -9        -14        -22        +7        -12  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Volumes in all our regions suffered from the adverse impact of the global COVID-19 pandemic, which reduced demand for fuel additive products. We believe that customer demand will start to recover in the third quarter as lockdowns in countries around the world are eased. Price and product mix in the Americas was favorable due to a richer sales mix, while price and product mix in the other regions was adverse due to lower sales of higher margin products. AvTel volumes were higher than the prior year due to variations in the demand from customers, partly offset by an adverse price and product mix. EMEA was negatively impacted by exchange rate movements year over year, driven by a weakening of the British pound sterling and the European Union euro against the U.S. dollar.
Gross margin
: the year over year decrease of 4.6 percentage points was due to the impact of the
COVID-19
pandemic in the second quarter reducing the demand for our higher margin products, together with adverse raw material costs and higher provisions for slow moving inventory.
Operating expenses:
the year over year decrease of $3.6 million was driven by lower personnel related performance-based remuneration due to a decrease in share-based compensation accruals linked to the Innospec share price, which declined significantly in the first quarter then partly recovered in the second quarter. There was also a reduction in travel and entertainment expenses as a result of the COVID-19 pandemic.
Performance Chemicals
Net sales:
the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:
 
    
Six Months Ended June 30, 2020
 
Change (%)
  
Americas
    
EMEA
    
ASPAC
    
Total
 
Volume
     +8        -5        +36        +2  
Price and product mix
     -12        -4        -2        -7  
Exchange rates
     0        -2        -1        -1  
  
 
 
    
 
 
    
 
 
    
 
 
 
     -4        -11        +33        -6  
  
 
 
    
 
 
    
 
 
    
 
 
 
Higher volumes in the Americas and ASPAC were driven by increased demand for our Personal Care and Home Care products. Volumes were lower in EMEA due to lower demand in Personal Care and Home Care products. All our regions suffered an adverse price and product mix due to increased sales of lower margin products. EMEA and ASPAC were negatively impacted by exchange rate movements year over year, due to a weakening of the British pound sterling and the European Union euro against the U.S. dollar during the quarter.
 
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Table of Contents
Gross margin:
the year over year increase of 2.4 percentage points was due to a richer sales mix, the continued benefit of margin improvement projects and the timing of pricing movements for certain raw materials.
Operating expenses:
the year over year decrease of $1.4 million was primarily driven by lower personnel related performance-based remuneration due to a decrease in the share-based compensation accruals linked to the Innospec share price, which declined significantly in the first quarter then partly recovered in the second quarter.
Oilfield Services
Net sales:
the year over year decrease of $82.7 million, or 35 percent, was primarily due to a collapse of customer activity in exploration and production for the US onshore market, as a result of the COVID-19 pandemic reducing world-wide demand together with the depressed price of crude oil. The Company hopes the demand for crude oil will begin to recover in the third quarter.
Gross margin:
the year over year decrease of 3.6 percentage points was due to significant inventory adjustments as a result of the collapse in demand.
Operating expenses:
the year over year decrease of $10.0 million was driven by the
right-sizing
of the operations to adjust for the reduction in demand caused by the global
COVID-19
pandemic.
Octane Additives
Net sales:
were nil in the first six months compared to $1.9 million in the first six months of the prior year. As expected for some time, the production of TEL for use in motor gasoline has now come to an end. The Company expects that the Octane Additives segment will not make any further sales and will cease to be a reporting segment from January 1, 2021.
Gross loss:
was a $2.2 million loss in the first six months compared to a $1.3 million loss in the first six months of the prior year. The loss in the current year primarily related to the accretion charge on the plant closure provision.
Operating expenses:
the year over year decrease of $0.8 million was a result of management plans to maintain efficient operational activity in line with the cessation of sales and production.
Other Income Statement Captions
Corporate costs:
the year over year decrease of $0.6 million was driven by lower personnel related performance-based remuneration, primarily due to a decrease in the share-based compensation accruals linked to the Innospec share price, which declined significantly in the first quarter then partly recovered in the second quarter. The reduction in costs was offset in part by higher spending on information technology following the network security incident in the second quarter of 2019.
Restructuring charge:
was $21.1 million related to the cessation of production and sales of TEL for use in motor gasoline. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for further information.
 
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Impairment of intangible assets:
was $19.8 million related to acquired intangible assets in our Oilfield Services segment. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for further information.
Other net income:
for the first six months of 2020 and 2019, included the following:
 
(in millions)
  
2020
    
2019
    
Change
 
United Kingdom pension credit
   $ 3.3      $ 3.8      $ (0.5
German pension charge
     (0.5      (0.2      (0.3
Foreign exchange losses on translation
     (0.6      (0.5      (0.1
Foreign currency forward contracts gains
     1.8        1.0        0.8  
  
 
 
    
 
 
    
 
 
 
   $ 4.0      $ 4.1      $ (0.1
  
 
 
    
 
 
    
 
 
 
Interest expense, net:
was $1.1 million for 2020 compared to $2.7 million in the prior year, driven by lower average net debt as the business generated cash inflows.
Income taxes:
the effective tax rate was 31.3% and 26.4% in the first six months of 2020 and 2019, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 25.8% in the first six months of 2020 compared with 26.4% in the first six months of 2019. The 0.6% reduction in the adjusted effective tax rate reflects the impact of a larger proportion of the Company’s profits being generated in lower tax jurisdictions. The Company believes that this adjusted effective tax rate, a
non-GAAP
financial measure, provides useful information to investors and may assist them in evaluating the Company’s underlying performance and identifying operating trends. In addition, management uses this
non-GAAP
financial measure internally to evaluate the performance of the Company’s operations and for planning and forecasting in subsequent periods.
The following table shows a reconciliation of the GAAP effective tax rate to the adjusted effective tax rate:
 
    
Six Months Ended

June 30
 
(in millions)
  
2020
   
2019
 
(Loss)/income before income taxes
   $ (9.6   $ 69.3  
Indemnification asset regarding tax audit
     (0.3     0.0  
Adjustment for stock compensation
     0.0       2.6  
Restructuring charge
     21.1       0.0  
Impairment of acquired intangible assets
     19.8       0.0  
  
 
 
   
 
 
 
   $ 31.0     $ 71.9  
  
 
 
   
 
 
 
Income taxes
   $ (3.0   $ 18.3  
Tax on stock compensation
     0.5       1.3  
Adjustment of income tax provision
     1.2       (0.6
Tax on restructuring charge
     4.3       0.0  
Tax on impairment of acquired intangible assets
     4.6       0.0  
Tax on foreign exchange on distribution
     0.4       0.0  
  
 
 
   
 
 
 
   $ 8.0     $ 19.0  
  
 
 
   
 
 
 
GAAP effective tax rate
     31.3     26.4
Adjusted effective tax rate
     25.8     26.4
 
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Table of Contents
LIQUIDITY AND FINANCIAL CONDITION
Working Capital
In the first six months of 2020 our working capital decreased by $13.1 million, while our adjusted working capital decreased by $1.5 million. The difference is primarily due to a reduction in our cash and cash equivalents, being partly offset by an increase for prepaid taxes.
The Company believes that adjusted working capital, a
non-GAAP
financial measure, (defined by the Company as trade and other accounts receivable, inventories, prepaid expenses, accounts payable and accrued liabilities rather than total current assets less total current liabilities) provides useful information to investors in evaluating the Company’s underlying performance and identifying operating trends. Management uses this
non-GAAP
financial measure internally to allocate resources and evaluate the performance of the Company’s operations. Items excluded from working capital in the adjusted working capital calculation are listed in the table below and represent factors which do not fluctuate in line with the day to day working capital needs of the business.
 
(in millions)
  
June 30,

2020
    
December 31,

2019
 
Total current assets
   $ 532.9      $ 630.3  
Total current liabilities
     (219.2      (303.5
  
 
 
    
 
 
 
Working capital
     313.7        326.8  
Less cash and cash equivalents
     (58.2      (75.7
Less prepaid income taxes
     (8.0      (2.5
Less other current assets
     0.0        (0.8
Add back current portion of accrued income taxes
     8.4        10.3  
Add back current portion of finance leases
     0.6        1.0  
Add back current portion of plant closure provisions
     6.3        5.6  
Add back current portion of operating lease liabilities
     11.0        10.6  
  
 
 
    
 
 
 
Adjusted working capital
   $ 273.8      $ 275.3  
  
 
 
    
 
 
 
We had a $78.6 million decrease in trade and other accounts receivable primarily driven by the decline in sales in our Fuel Specialties and Oilfield Services segments as a result of the
COVID-19
pandemic. Days’ sales outstanding in our Fuel Specialties segment increased from 52 days to 59 days; remained unchanged in our Performance Chemicals segment at 64 days; and increased from 66 days to 112 days in our Oilfield Services segment.
We had a $1.0 million decrease in inventories, net of a $2.5 million increase in allowances, as we managed inventory levels to align with the depressed sales in the second quarter resulting from the COVID-19 pandemic. Days’ sales in inventory in our Fuel Specialties segment increased from 97 days to 149 days; increased in our Performance Chemicals segment from 66 days to 81 days; and increased from 71 days to 122 days in our Oilfield Services segment.
Prepaid expenses decreased $5.0 million, from $14.7 million to $9.7 million due to the normal expensing of prepaid invoices.
We had a $83.1 million decrease in accounts payable and accrued liabilities primarily due to lower production activity to align with reduced customer demand, together with lower accruals for share-based payments linked to the decrease in the Innospec share price during the first quarter of the year. Creditor days (including goods received not invoiced) in our Fuel Specialties segment decreased from 52 days to 29 days; decreased in our Performance Chemicals segment from 54 days to 49 days; and decreased in our Oilfield Services segment from 43 days to 33 days.
 
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Table of Contents
Operating Cash Flows
We generated cash from operating activities of $32.2 million in the first six months of 2020 compared to cash inflows of $63.2 million in the first six months of 2019. The reduction in cash generated from operating activities was primarily related to the adverse impact of
COVID-19
on customer activity and the timing of payments for income taxes.
Cash
At June 30, 2020 and December 31, 2019, we had cash and cash equivalents of $58.2 million and $75.7 million, respectively, of which $27.3 million and $57.9 million, respectively, were held by
non-U.S.
subsidiaries principally in the United Kingdom.
The decrease in cash and cash equivalents in 2020 of $17.5 million was primarily related to the repayment of $20.0 million of our revolving credit facility.
Debt
At June 30, 2020, we had $40.0 million of debt outstanding under the revolving credit facility and $0.8 million of obligations under finance leases relating to certain fixed assets within our Fuel Specialties and Oilfield Services segments.
At December 31, 2019, we had $60.0 million of debt outstanding under the revolving credit facility and $1.5 million of obligations under finance leases relating to certain fixed assets within our Fuel Specialties and Oilfield Services segments.
 
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Table of Contents
Item 3    Quantitative and Qualitative Disclosures about Market Risk
The Company uses floating rate debt to finance its global operations. The Company is subject to business risks inherent in
non-U.S.
activities, including political and economic uncertainty, import and export limitations, and market risk related to changes in interest rates and foreign currency exchange rates. The political and economic risks are mitigated by the stability of the major countries in which the Company’s largest operations are located. Credit limits, ongoing credit evaluation and account monitoring procedures are used to minimize bad debt risk. Collateral is not generally required.
From time to time, the Company uses derivatives, including interest rate swaps, commodity swaps and foreign currency forward exchange contracts, in the normal course of business to manage market risks. The derivatives used in hedging activities are considered risk management tools and are not used for trading purposes. In addition, the Company enters into derivative instruments with a diversified group of major financial institutions in order to manage the exposure to
non-performance
of such instruments. The Company’s objective in managing the exposure to changes in interest rates is to limit the impact of such changes on earnings and cash flows and to lower overall borrowing costs. The Company’s objective in managing the exposure to changes in foreign currency exchange rates is to reduce volatility on earnings and cash flows associated with such changes.
The Company offers fixed prices for some long-term sales contracts. As manufacturing and raw material costs are subject to variability the Company, from time to time, uses commodity swaps to hedge the cost of some raw materials thus reducing volatility on earnings and cash flows. The derivatives are considered risk management tools and are not used for trading purposes. The Company’s objective is to manage its exposure to fluctuating costs of raw materials.
The Company’s exposure to market risk has been discussed in the Company’s 2019 Annual Report on Form
10-K
and there have been no significant changes since that time.
 
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Table of Contents
Item 4    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on an evaluation carried out as of the end of the period covered by this report, under the supervision and with the participation of our management, our Chief Executive Officer and our Chief Financial Officer concluded that the Company’s “disclosure controls and procedures” (as defined in Rules
13a-15(e)
and
15d-15(e)
of the Securities Exchange Act of 1934) were effective as of June 30, 2020.
Changes in Internal Control over Financial Reporting
The Company is continuously seeking to improve the efficiency and effectiveness of its operations and of its internal control over financial reporting. This is intended to result in refinements to processes throughout the Company.
There were no changes to our internal control over financial reporting which were identified in connection with the evaluation required by paragraph (d) of Rules
13a-15
and
15d-15
under the Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
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Table of Contents
PART II    OTHER INFORMATION
Item 1    Legal Proceedings
Legal matters
While we are involved from time to time in claims and legal proceedings that result from, and are incidental to, the conduct of our business including business and commercial litigation, employee and product liability claims, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their property is subject. It is possible, however, that an adverse resolution of an unexpectedly large number of such individual claims or proceedings could, in the aggregate, have a material adverse effect on results of operations for a particular year or quarter.
Item 1A    Risk Factors
Information regarding risk factors that could have a material impact on our results of operations or financial condition are described under “Risk Factors” in Item 1A of Part I of our 2019 Form 10-K. In management’s view, there have been no material changes in the risk factors facing the Company since that time other than an update to the risk factor first disclosed under “Risk Factors” in Item 1A of Part II of our Form 10-Q for the quarter ended March 31, 2020, as follows:
The
COVID-19
pandemic has had, and is expected to continue to have, an adverse impact on our business, results of operations, financial position and cash flows.
We have been closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact our customers, employees, supply chain, and distribution network. The effects of COVID-19 on the global economic environment have impacted the results of the Company significantly, particularly with respect to reduced demand within our Fuel Specialties and Oilfield Services segments, and we are unable to predict the ultimate impact that it may have on our business, future results of operations, financial position or cash flows. The further extent to which our operations may be impacted by the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted. These include, but are not limited to, the availability and productivity of our employees, the duration and severity of the pandemic; government restrictions on businesses and individuals; the impact of the pandemic on our customers’ businesses and the resulting demand for our products; the impact on our suppliers and supply chain network; the impact on global economies and the timing and rate of economic recovery; and potential adverse effects on the financial markets.
The impact of
COVID-19
may also exacerbate other risks discussed in Item 1A, “Risk Factors” in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2019, any of which could have a material effect on us. This situation is changing rapidly and additional impacts may arise that we are not aware of currently.
Item 2    Unregistered Sales of Equity Securities and Use of Proceeds
There have been no unregistered sales of equity securities.
During the quarter ended June 30, 2020 the Company made no open market repurchases of its common stock.
 
36

Table of Contents
During the quarter ended June 30, 2020, the company did not purchase any of its common stock in connection with the exercising of stock options by employees.
Item 3    Defaults Upon Senior Securities
None.
Item 4    Mine Safety Disclosures
Not applicable.
Item 5    Other Information
None.
Item 6    Exhibits
 
31.1    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1    Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2    Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101    XBRL Instance Document and Related Item - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
104    Cover Page Interactive Data File – The cover page XBRL tags are embedded within the inline XBRL document.
 
37

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
     
INNOSPEC INC.
     
Registrant
Date: August 5, 2020     By   
/s/                            PATRICK S. WILLIAMS
     
Patrick S. Williams
     
President and Chief Executive Officer
Date: August 5, 2020     By  
/s/                             IAN P. CLEMINSON
     
Ian P. Cleminson
     
Executive Vice President and Chief Financial Officer
 
EX-31.1

Exhibit 31.1

CERTIFICATION BY PATRICK S. WILLIAMS PURSUANT TO

SECURITIES EXCHANGE ACT 1934 RULE 13a-14 and 15d-14

I, Patrick S. Williams, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Innospec Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ PATRICK S. WILLIAMS                                        

Patrick S. Williams

President and Chief Executive Officer

August 5, 2020

EX-31.2

Exhibit 31.2

CERTIFICATION BY IAN P. CLEMINSON PURSUANT TO

SECURITIES EXCHANGE ACT 1934 RULE 13a-14 and 15d-14

I, Ian P. Cleminson, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Innospec Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ IAN P. CLEMINSON                                        

Ian P. Cleminson

Executive Vice President and Chief Financial Officer

August 5, 2020

EX-32.1

Exhibit 32.1

Section 1350 Certification

by Patrick S. Williams

In connection with the Quarterly Report on Form 10-Q of Innospec Inc. (the “Company”) for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick S. Williams, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  (2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ PATRICK S. WILLIAMS                                         

Patrick S. Williams

President and Chief Executive Officer

August 5, 2020

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of this Report or as a separate disclosure document.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission upon request.

EX-32.2

Exhibit 32.2

Section 1350 Certification

by Ian P. Cleminson

In connection with the Quarterly Report on Form 10-Q of Innospec Inc. (the “Company”) for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ian P. Cleminson, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  (2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ IAN P. CLEMINSON                                         

Ian P. Cleminson

Executive Vice President and Chief Financial Officer

August 5, 2020

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of this Report or as a separate disclosure document.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission upon request.

v3.20.2
Cover Page - shares
6 Months Ended
Jun. 30, 2020
Jul. 31, 2020
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Document Quarterly Report true  
Document Transition Report false  
Current Fiscal Year End Date --12-31  
Document Period End Date Jun. 30, 2020  
Entity File Number 1-13879  
Entity Registrant Name INNOSPEC INC.  
Entity Central Index Key 0001054905  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 98-0181725  
Entity Address, Postal Zip Code 80112  
City Area Code 303  
Local Phone Number 792 5554  
Security Exchange Name NASDAQ  
Title of 12(b) Security Common stock  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   24,567,952
Entity Address, Address Line One 8310 South Valley Highway  
Entity Address, Address Line Two Suite 350  
Entity Address, City or Town Englewood  
Entity Address, State or Province CO  
Trading Symbol IOSP  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
v3.20.2
Condensed Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
Net sales $ 244.9 $ 362.4 $ 617.2 $ 750.7
Cost of goods sold (185.8) (251.3) (444.2) (521.8)
Gross profit 59.1 111.1 173.0 228.9
Operating expenses:        
Selling, general and administrative (63.5) (71.2) (127.9) (143.7)
Research and development (8.1) (8.2) (16.7) (17.3)
Restructuring charge (21.1) (0.0) (21.1) (0.0)
Impairment of intangible assets (19.8) (0.0) (19.8) (0.0)
Total operating expenses (112.5) (79.4) (185.5) (161.0)
Operating (loss)/income (53.4) 31.7 (12.5) 67.9
Other income, net 0.1 0.0 4.0 4.1
Interest expense, net (0.5) (1.2) (1.1) (2.7)
(Loss)/income before income tax expense (53.8) 30.5 (9.6) 69.3
Income tax credit/(expense) 14.1 (8.2) 3.0 (18.3)
Net (loss)/income $ (39.7) $ 22.3 $ (6.6) $ 51.0
Earnings per share:        
Basic $ (1.62) $ 0.91 $ (0.27) $ 2.08
Diluted $ (1.62) $ 0.90 $ (0.27) $ 2.07
Weighted average shares outstanding (in thousands):        
Basic 24,564 24,483 24,547 24,468
Diluted 24,564 24,678 24,547 24,671
v3.20.2
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net (loss)/income $ (39.7) $ 22.3 $ (6.6) $ 51.0
Changes in cumulative translation adjustment, net of tax of $(0.1) million, $0.3 million, $1.5 million and $0.1 million respectively 5.5 3.4 (2.4) (1.6)
Changes in unrealized losses on derivative instruments, net of tax of $0.0 million, $0.1 million, $0.0 million and $0.2 million respectively 0.0 (0.7) 0.0 (1.2)
Amortization of prior service credit, net of tax of $0.0 million, $0.1 million, $0.1 million and $0.1 million respectively (0.2) (0.3) (0.4) (0.5)
Amortization of actuarial net losses, net of tax of $0.0 million, $0.0 million, $(0.1) million and $0.0 million respectively 0.6 (0.0) 0.8 (0.0)
Total other comprehensive income/(loss) 5.9 2.4 (2.0) (3.3)
Total comprehensive (loss)/income $ (33.8) $ 24.7 $ (8.6) $ 47.7
v3.20.2
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Changes in cumulative translation adjustment, tax $ (0.1) $ 0.3 $ 1.5 $ 0.1
Unrealized gains on derivative instruments, tax 0.0 0.1 0.0 0.2
Amortization of prior service credit, tax 0.0 0.1 0.1 0.1
Amortization of actuarial net losses, tax $ 0.0 $ 0.0 $ (0.1) $ 0.0
v3.20.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 58.2 $ 75.7
Trade and other accounts receivable (less allowances of $4.3 million and $3.8 million respectively) 213.4 292.0
Inventories (less allowances of $18.0 million and $14.5 million respectively):    
Finished goods 175.4 173.9
Raw materials 68.2 70.7
Total inventories 243.6 244.6
Prepaid expenses 9.7 14.7
Prepaid income taxes 8.0 2.5
Other current assets 0.0 0.8
Total current assets 532.9 630.3
Net property, plant and equipment 198.9 198.7
Operating lease right-of-use assets 29.5 32.4
Goodwill 363.3 363.0
Other intangible assets 82.3 113.5
Deferred tax assets 8.9 9.1
Pension asset 118.6 115.9
Other non-current assets 4.6 5.9
Total assets 1,339.0 1,468.8
Current liabilities:    
Accounts payable 74.1 122.0
Accrued liabilities 118.8 154.0
Current portion of finance leases 0.6 1.0
Current portion of plant closure provisions 6.3 5.6
Current portion of accrued income taxes 8.4 10.3
Current portion of operating lease liabilities 11.0 10.6
Total current liabilities 219.2 303.5
Long-term debt 38.8 58.6
Finance leases, net of current portion 0.2 0.5
Plant closure provisions, net of current portion 51.6 43.7
Accrued income taxes, net of current portion 32.4 36.2
Unrecognized tax benefits 15.2 16.4
Operating lease liabilities, net of current portion 18.6 21.9
Deferred tax liabilities 44.0 49.6
Pension liabilities and post-employment benefits 17.9 17.8
Other non-current liabilities 1.4 1.7
Equity:    
Common stock, $0.01 par value, authorized 40,000,000 shares, issued 29,554,500 shares 0.3 0.3
Additional paid-in capital 333.0 330.4
Treasury stock (4,985,884 and 5,047,278 shares at cost, respectively) (93.8) (93.3)
Retained earnings 736.1 755.5
Accumulated other comprehensive loss (76.4) (74.4)
Total Innospec stockholders' equity 899.2 918.5
Non-controlling interest 0.5 0.4
Total equity 899.7 918.9
Total liabilities and equity $ 1,339.0 $ 1,468.8
v3.20.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Allowances for doubtful accounts $ 4.3 $ 3.8
Inventory allowances $ 18.0 $ 14.5
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 40,000,000 40,000,000
Common stock, shares issued 29,554,500 29,554,500
Treasury stock, shares 4,985,884 5,047,278
v3.20.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Cash Flows from Operating Activities    
Net (loss)/income $ (6.6) $ 51.0
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 24.2 23.8
Impairment of intangible assets 19.8 0.0
Impairment of tangible assets 2.0 0.0
Deferred tax expense (5.6) 0.1
Cash contributions to defined benefit pension plans (0.0) (0.5)
Non-cash movements on defined benefit pension plans (2.2) (3.1)
Stock option compensation 2.8 3.2
Changes in assets and liabilities, net of effects of acquired and divested companies:    
Trade and other accounts receivable 76.2 (0.7)
Inventories (2.1) (0.1)
Prepaid expenses 3.9 (0.2)
Accounts payable and accrued liabilities (79.6) (10.4)
Accrued income taxes (9.5) (0.6)
Plant closure provisions 8.5 0.0
Unrecognized tax benefits (1.3) 0.7
Other assets and liabilities 1.7 (0.0)
Net cash provided by operating activities 32.2 63.2
Cash Flows from Investing Activities    
Capital expenditures (14.6) (16.2)
Internally developed software (0.0) (0.7)
Net cash used in investing activities (14.6) (16.9)
Cash Flows from Financing Activities    
Non-controlling interest 0.1 0.0
Proceeds from revolving credit facility 15.0 23.0
Repayments of revolving credit facility (35.0) (73.0)
Receipt of short-term borrowing 0.0 0.7
Repayments of finance leases (0.6) (0.9)
Dividend paid (12.8) (12.2)
Issue of treasury stock 0.8 1.3
Repurchase of common stock (2.1) (2.1)
Net cash used in financing activities (34.6) (63.2)
Effect of foreign currency exchange rate changes on cash (0.5) (0.1)
Net change in cash and cash equivalents (17.5) (17.0)
Cash and cash equivalents at beginning of period 75.7 123.1
Cash and cash equivalents at end of period $ 58.2 $ 106.1
v3.20.2
Condensed Consolidated Statements of Equity - USD ($)
$ in Millions
Total
Common Stock [Member]
Additional Paid-In Capital [Member]
Treasury Stock [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Loss [Member]
Non-Controlling Interest [Member]
Beginning Balance at Dec. 31, 2018 $ 825.5 $ 0.3 $ 324.9 $ (92.8) $ 668.3 $ (75.7) $ 0.5
Net income 51.0       51.0    
Dividend paid (12.2)       (12.2)    
Changes in cumulative translation adjustment, net of tax (1.6)         (1.6)  
Share of net income 0.1           0.1
Changes in unrealized gains on derivative instruments, net of tax (1.2)         (1.2)  
Treasury stock reissued 1.1   (0.4) 1.5      
Treasury stock repurchased (2.1)     (2.1)      
Stock option compensation 3.2   3.2        
Amortization of prior service credit, net of tax (0.5)         (0.5)  
Amortization of actuarial net losses, net of tax (0.0)            
Ending Balance at Jun. 30, 2019 863.1 0.3 327.7 (93.4) 707.1 (79.0) 0.4
Beginning Balance at Mar. 31, 2019 848.9 0.3 326.0 (93.5) 697.0 (81.4) 0.5
Net income 22.3       22.3    
Dividend paid (12.2)       (12.2)    
Changes in cumulative translation adjustment, net of tax 3.4         3.4  
Share of net income 0.1           0.1
Changes in unrealized gains on derivative instruments, net of tax (0.7)         (0.7)  
Treasury stock reissued 0.4   0.1 0.3      
Treasury stock repurchased (0.2)     (0.2)      
Stock option compensation 1.6   1.6        
Amortization of prior service credit, net of tax (0.3)         (0.3)  
Amortization of actuarial net losses, net of tax (0.0)            
Ending Balance at Jun. 30, 2019 863.1 0.3 327.7 (93.4) 707.1 (79.0) 0.4
Beginning Balance at Dec. 31, 2019 918.9 0.3 330.4 (93.3) 755.5 (74.4) 0.4
Net income (6.6)       (6.6)    
Dividend paid (12.8)       (12.8)    
Changes in cumulative translation adjustment, net of tax (2.4)         (2.4)  
Share of net income 0.1           0.1
Changes in unrealized gains on derivative instruments, net of tax 0.0            
Treasury stock reissued 1.4   (0.2) 1.6      
Treasury stock repurchased (2.1)     (2.1)      
Stock option compensation 2.8   2.8        
Amortization of prior service credit, net of tax (0.4)         (0.4)  
Amortization of actuarial net losses, net of tax 0.8         0.8  
Ending Balance at Jun. 30, 2020 899.7 0.3 333.0 (93.8) 736.1 (76.4) 0.5
Beginning Balance at Mar. 31, 2020 944.3 0.3 331.2 (94.0) 788.6 (82.3) 0.5
Net income (39.7)       (39.7)    
Dividend paid (12.8)       (12.8)    
Changes in cumulative translation adjustment, net of tax 5.5         5.5  
Changes in unrealized gains on derivative instruments, net of tax 0.0            
Treasury stock reissued 0.4   0.2 0.2      
Stock option compensation 1.6   1.6        
Amortization of prior service credit, net of tax (0.2)         (0.2)  
Amortization of actuarial net losses, net of tax 0.6         0.6  
Ending Balance at Jun. 30, 2020 $ 899.7 $ 0.3 $ 333.0 $ (93.8) $ 736.1 $ (76.4) $ 0.5
v3.20.2
Consolidated Statements of Equity (Parenthetical) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Stockholders' Equity [Abstract]        
Dividend paid, per share $ 0.52 $ 0.52 $ 0.52 $ 0.52
v3.20.2
Basis of Presentation
6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form
10-Q
and Article 10 of Regulation
S-X
under the Securities Exchange Act of 1934. Accordingly, they do not include all the information and notes necessary for a comprehensive presentation of financial position, results of operations and cash flows.
It is our opinion, however, that all adjustments (consisting of normal, recurring adjustments, unless otherwise disclosed) have been made which are necessary for the condensed consolidated financial statements to be fairly stated. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2019 filed on February 19, 2020 (the “2019 Form
10-K”).
The results for the interim period covered by this report are not necessarily indicative of the results to be expected for the full year.
When we use the terms “Innospec,” “the Corporation,” “the Company,” “Registrant,” “we,” “us” and “our,” we are referring to Innospec Inc. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.
Credit losses
With an effective date of January 1, 2020, we have applied Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (ASC Topic 326). This replaces the incurred loss impairment methodology under previous GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
The standard was adopted using prospective application and principally impacts the allowance for trade and other accounts receivables. Upon adoption, there was no adjustment made to opening retained earnings as at January 1, 2020. As a result of implementing the standard, the Company did not recognize any material change to the allowance within trade and other accounts receivable as at January 1, 2020. Trade
and
 other accounts receivable are shown net of a $4.3 million allowance at June 30, 2020. The allowance remains immaterial to the financial statements.
The Company is exposed to credit losses primarily through sales of products. The Company’s expected loss allowance methodology for trade and other accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers’ receivables. Due to the short-term nature
of
 such receivables, the estimate of accounts receivable amounts that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, a further allowance is included to account for the Company’s historic track record of credit losses, for balances which are not aged sufficiently to be considered under the aging based approach.
The Company considered the current and expected future economic
and
 market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted.
v3.20.2
Segment Reporting
6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Segment Reporting
NOTE 2 – SEGMENT REPORTING
The Company reports its financial performance based on the following four reportable segments: Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives.
The Fuel Specialties, Performance Chemicals and Oilfield Services segments operate in markets where we actively seek growth opportunities although their ultimate customers are different. The Company expects that the Octane Additives segment will not make any further sales and will cease to be a reporting segment from January 1, 2021, see Note 4 of the Notes to the Condensed Consolidated Financial Statements for further information.
The Company evaluates the performance of its segments based on operating income. The following tables analyze sales and other financial information by the Company’s reportable segments:
 
    
Three Months Ended

June 30
    
Six Months Ended

June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Net Sales:
           
Refinery and Performance
   $ 74.9      $ 95.2      $ 183.5      $ 212.5  
Other
     32.5        38.1        70.9        76.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Fuel Specialties
     107.4        133.3        254.4        289.3  
  
 
 
    
 
 
    
 
 
    
 
 
 
Personal Care
     49.8        54.9        112.8        115.9  
Home Care
     21.3        23.1        42.9        50.1  
Other
     24.6        26.7        53.1        56.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Performance Chemicals
     95.7        104.7        208.8        222.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Oilfield Services
     41.8        122.5        154.0        236.7  
Octane Additives
     0.0        1.9        0.0        1.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
    $
244.9
     $
362.4
     $617.2      $750.7  
  
 
 
    
 
 
    
 
 
    
 
 
 
Gross profit/(loss):
               
Fuel Specialties
   $ 25.4      $ 44.7      $ 76.6      $ 100.4  
Performance Chemicals
     24.9        24.0        52.5        50.6  
Oilfield Services
     9.9        41.5        46.1        79.2  
Octane Additives
     (1.1      0.9        (2.2      (1.3
  
 
 
    
 
 
    
 
 
    
 
 
 
     $
59.1
     $
111.1
     $173.0      $228.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
Operating income/(loss):
               
Fuel Specialties
   $ 4.7      $ 24.1      $ 36.8      $ 57.0  
Performance Chemicals
     12.2        11.0        27.8        24.5  
Oilfield Services
     (12.4      10.1        (5.2      17.9  
Octane Additives
     (1.6      0.1        (2.8      (2.7
Corporate costs
     (15.4      (13.6      (28.2      (28.8
Restructuring charge
     (21.1      0.0        (21.1      0.0  
Impairment of intangible assets
     (19.8      0.0        (19.8      0.0  
  
 
 
    
 
 
    
 
 
    
 
 
 
Total operating
(loss)/
income
   $ (53.4    $ 31.7      $ (12.5    $ 67.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
v3.20.2
Earnings per Share
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Earnings per Share
NOTE 3 – EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the effect of options that are dilutive and outstanding during the period under the treasury stock method. Per share amounts are computed as follows:
 
    
Three Months Ended

June 30
    
Six Months Ended

June 30
 
    
2020
   
2019
    
2020
   
2019
 
Numerator (in millions):
         
Net
 
(loss)/
income available to common stockholders
   $ (39.7   $ 22.3      $ (6.6   $ 51.0  
  
 
 
   
 
 
    
 
 
   
 
 
 
Denominator (in thousands):
         
Weighted average common shares outstanding
     24,564       24,483        24,547       24,468  
Dilutive effect of stock options and awards
     0       195        0       203  
  
 
 
   
 
 
    
 
 
   
 
 
 
Denominator for diluted earnings per share
     24,564       24,678        24,547       24,671  
  
 
 
   
 
 
    
 
 
   
 
 
 
Net
 
(loss)/
income per share, basic:
   $ (1.62   $ 0.91      $ (0.27   $ 2.08  
  
 
 
   
 
 
    
 
 
   
 
 
 
Net
 
(loss)/
income per share, diluted:
   $ (1.62   $ 0.90      $ (0.27   $ 2.07  
  
 
 
   
 
 
    
 
 
   
 
 
 
In the three and six months ended June 30, 2020, the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were 0 and 0, respectively (three and six months ended June 30, 2019 – 12,539 and 212,095, respectively).
v3.20.2
Restructuring
6 Months Ended
Jun. 30, 2020
Restructuring Charges [Abstract]  
Restructuring
NOTE 4 – RESTRUCTURING
During the quarter ended June 30, 2020, the Company has recorded provisions of $21.1 million for the restructuring of its Octane Additives segment in line with the end of the manufacturing and sale of tetra ethyl lead (“TEL”) for use in motor gasoline. The Company expects that the Octane Additives segment will not make
 any
further sales
and will cease to be a reporting segment from January 1, 2021
. Production of TEL will continue for sales to the aviation market, as reported within our Fuel Specialties segment.
The provisions comprise the future committed costs of environmental monitoring
 
of $2.0 million,
remediation of facilities of $7.5 million, provision for
 
a
 
loss making contract of $7.2 million, impairment of tangible assets of $2.0 million and costs of redundancy due to the
down-sizing
of the TEL operations of $2.4 million.
v3.20.2
Goodwill
6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill
NOTE 5 – GOODWILL
The following table summarizes the goodwill movements:
 
(in millions)
  
Gross Cost
    
Accumulated
Impairment
Losses
    
Net Book
Amount
 
Opening balance at January 1
   $ 599.5      $ (236.5    $ 363.0  
Exchange effect
     0.3        0.0        0.3  
  
 
 
    
 
 
    
 
 
 
Closing balance at June 30
   $ 599.8      $ (236.5    $ 363.3  
  
 
 
    
 
 
    
 
 
 
v3.20.2
Other Intangible Assets
6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Other Intangible Assets
NOTE 6 – OTHER INTANGIBLE ASSETS
The following table summarizes the other intangible assets movements:
 
(in millions)
  
2020
 
Gross cost at January 1
   $ 294.8  
Exchange effect
     0.1  
  
 
 
 
Gross cost at June 30
     294.9  
  
 
 
 
Accumulated amortization at January 1
     (181.3
Amortization expense
     (11.5
Impairment
     (19.8
Exchange effect
     0.0  
  
 
 
 
Accumulated amortization at June 30
     (212.6
  
 
 
 
Net book amount at June 30
   $ 82.3  
  
 
 
 
During the quarter ended June 30, 2020, the Company impaired the intangible assets arising from the acquisition of Strata Control Services Inc., which forms part of our Oilfield Services segment. The impairment review was triggered by the reduction in demand for drilling related products. A discounted cash flow analysis was performed to determine the fair value of the assets, linked to the down turn in the results of that segment. The impaired assets relate to technology ($10.0 million) and customer relationships ($9.8 million).
The amortization expense for the six months ended June 30, 2020 was $11.5 million (six months ended June 30, 2019 – $11.5 million).
The net book amount by category of other intangible assets is shown in the following table:
 
(in millions)
  
June 30

2020
    
December 31

2019
 
Product rights
   $ 8.2      $ 10.1  
Brand names
     2.6        2.9  
Technology
     20.9        32.6  
Customer relationships
     45.8        60.8  
Internally developed software
     4.8        7.1  
  
 
 
    
 
 
 
   $ 82.3      $ 113.5  
  
 
 
    
 
 
 
v3.20.2
Pension and Post-Employment Benefits
6 Months Ended
Jun. 30, 2020
Retirement Benefits [Abstract]  
Pension and Post-Employment Benefits
NOTE 7 – PENSION AND POST EMPLOYMENT BENEFITS
The Company maintains a defined benefit pension plan (the “Plan”) covering a number of its current and former employees in the United Kingdom, although it does also have other much smaller pension arrangements in the U.S. and overseas. The Plan is closed to future service accrual but has a large number of deferred and current pensioners.
The net service cost for the three and six months ended June 30, 2020 was $0.3 million and $0.6 million respectively (three and six months ended June 30, 2019 – $0.3 million and $0.5 million respectively) and has been recognized in selling, general and administrative expenses within corporate costs. The following table shows the income statement effect recognized within other income, net:
 
    
Three Months Ended

June 30
    
Six Months Ended
June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Plan net pension credit/(charge):
           
Interest cost on projected benefit obligation
   $ (2.7    $ (3.9    $ (5.5    $ (7.8
Expected return on plan assets
     4.3        5.5        8.8        11.1  
Amortization of prior service credit
     0.2        0.3        0.4        0.5  
Amortization of actuarial net losses
     (0.2      0.0        (0.4      0.0  
  
 
 
    
 
 
    
 
 
    
 
 
 
   $ 1.6      $ 1.9      $ 3.3      $ 3.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
The amortization of prior service credit and actuarial net losses is a reclassification out of accumulated other comprehensive loss into other income and expense.
The Company also maintains an unfunded defined benefit pension plan covering a number of its current and former employees in Germany (the “German plan”) within our Fuel Specialties segment. The German plan is closed to new entrants and has no assets. The net service cost for the German plan for the three and six months ended June 30, 2020 was $0.1 million and $0.1 million respectively (three and six months ended June 30, 2019 – $0.1 million and $0.1 million respectively) and has been recognized in selling, general and administrative expenses. The following table shows the income statement effect recognized within other income and expense:
 
    
Three Months Ended
June 30
    
Six Months Ended

June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Plan net pension charge:
           
Interest cost on projected benefit obligation
   $ 0.0      $ 0.0      $ (0.1    $ (0.1
Amortization of actuarial net losses
     (0.3      0.0        (0.4      (0.1
  
 
 
    
 
 
    
 
 
    
 
 
 
   $ (0.3    $ 0.0      $ (0.5    $ (0.2
  
 
 
    
 
 
    
 
 
    
 
 
 
As at June 30, 2020, our Performance Chemicals segment has obligations for post-employment benefits in its European businesses with a liability of $4.6 million (December 31, 2019 – $4.5 million).
v3.20.2
Income Taxes
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes
NOTE 8 – INCOME TAXES
A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:
 
(in millions)
  
Unrecognized
Tax Benefits
    
Interest and
Penalties
    
Total
 
Opening balance at January 1
   $ 14.4      $ 2.0      $ 16.4  
Net change
 
for tax positions of prior periods
     (1.2      0.0        (1.2
  
 
 
    
 
 
    
 
 
 
Closing balance at June 30
     13.2        2.0        15.2  
Current
     0.0        0.0        0.0  
  
 
 
    
 
 
    
 
 
 
Non-current
   $ 13.2      $ 2.0      $ 15.2  
  
 
 
    
 
 
    
 
 
 
All of the $15.2 million of unrecognized tax benefits, interest and penalties would impact our effective tax rate if recognized.
As previously disclosed, a
non-U.S.
subsidiary, Innospec Performance Chemicals Italia Srl, is subject to an ongoing tax audit in relation to the period 2011 to 2014 inclusive. The Company has determined that additional tax, interest and penalties totaling $3.1 million may arise as a consequence of the tax audit. This includes a reduction in interest accrued of $0.2 million recorded in the six months to June 30, 2020. As any additional tax arising as a consequence of the tax audit would be reimbursed by the previous owner under the terms of the sale and purchase agreement, an indemnification asset of the same amount is recorded in the financial statements to reflect this arrangement.
As previously disclosed, in 2018 the Company recorded an unrecognized tax benefit
 in
 
relation
 
to a potential adjustment that could arise as a consequence of the Tax Cuts and Jobs Act, but for which retrospective adjustment to the filed 2017 U.S. federal income tax returns was not permissible. The Company
 
has determined that additional tax, interest and penalties totaling $12.1 million may arise in relation to this item. This includes
 
an
 
increase in interest
 
accr
u
ed
 
of $0.4 million in the six months to June 30, 2020
.
In 2015, the Company recorded an unrecognized tax benefit of $1.2 million in relation to additional tax that could have arisen if a historical impairment in value of certain of the Company’s
non-U.S.
subsidiaries was reversed upon challenge by the tax authorities. The Company has released the provision of $1.2 million in full, together with accrued interest of $0.2 million thereon, in the three months ended June 30, 2020, following a review of the value of the Company’s investments that confirmed the historical impairment in value undertaken in 2005 was appropriate.
The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2016 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Germany (2015 onwards), Switzerland (2015 onwards), Spain (2016 onwards), France (2017 onwards) and the United Kingdom (2018 onwards).
v3.20.2
Long-Term Debt
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Long-Term Debt
NOTE 9 – LONG-TERM DEBT
Long-term debt consists of the following:
 
(in millions)
  
June 30,

2020
    
December 31,

2019
 
Revolving credit facility
   $ 40.0      $ 60.0  
Deferred finance costs
     (1.2      (1.4
  
 
 
    
 
 
 
     38.8        58.6  
Less current portion
     0.0        0.0  
  
 
 
    
 
 
 
   $ 38.8      $ 58.6  
  
 
 
    
 
 
 
v3.20.2
Plant Closure Provisions
6 Months Ended
Jun. 30, 2020
Restructuring and Related Activities [Abstract]  
Plant Closure Provisions
NOTE 10 – PLANT CLOSURE PROVISIONS
The Company has continuing plans to close some of its manufacturing facilities at sites around the world as and when those operations are expected to be decommissioned. The liability for estimated closure costs of Innospec’s manufacturing facilities includes costs for decontamination and environmental remediation activities (“remediation”).
As a result, the principal site giving rise to remediation liabilities is the manufacturing site at Ellesmere Port in the United Kingdom. There are also remediation liabilities on a much smaller scale in respect of our other manufacturing sites in the U.S. and Europe.
Movements in the provisions are summarized as follows:
 
(in millions)
  
2020
 
Total at January 1
   $ 49.3  
Charge for the period
     9.8  
Utilized in the period
     (1.3
Exchange effect
     0.1  
  
 
 
 
Total at June 30
     57.9  
Due within one year
     (6.3
  
 
 
 
Due after one year
   $ 51.6  
  
 
 
 
The charge for the six months ended June 30, 2020 was $9.8 million (six months ended June 30, 2019 – $2.1 million). This includes $7.5 million of additional provisions as a result of the restructuring activities following the cessation of sales of TEL for use in motor gasoline (see Note 4 of the Notes to the Condensed Consolidated Financial Statements for further information).
Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date.
v3.20.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements
NOTE 11 – FAIR VALUE MEASUREMENTS
The following table presents the carrying amount and fair values of the Company’s financial assets and liabilities measured on a recurring basis:
 
    
June 30, 2020
    
December 31, 2019
 
(in millions)
  
Carrying

Amount
    
Fair

Value
    
Carrying

Amount
    
Fair

Value
 
Assets
           
Non-derivatives:
           
Cash and cash equivalents
   $ 58.2      $ 58.2      $ 75.7      $ 75.7  
Derivatives (Level 1 measurement):
           
Other current and
non-current
assets:
           
Foreign currency forward exchange contracts
     0.0        0.0        0.8        0.8  
Liabilities
           
Non-derivatives:
           
Long-term debt (including current portion)
   $ 38.8      $ 38.8      $ 58.6      $ 58.6  
Finance leases (including current portion)
     0.8        0.8        1.5        1.5  
Derivatives (Level 1 measurement):
           
Other current and
non-current
liabilities:
           
Foreign currency forward exchange contracts
     0.6        0.6        0.0        0.0  
Non-financial
liabilities (Level 3 measurement):
           
Other current and
non-current
liabilities:
           
Stock equivalent units
     14.5        14.5        24.6        24.6  
The following methods and assumptions were used to estimate the fair values of financial instruments:
Cash and cash equivalents:
The carrying amount approximates fair value because of the short-term maturities of such instruments.
Derivatives:
The fair value of derivatives relating to foreign currency forward exchange contracts are derived from current settlement prices and comparable contracts using current assumptions. Foreign currency forward exchange contracts primarily relate to contracts entered into to hedge future known transactions or hedge balance sheet net cash positions. The movements in the carrying amounts and fair values of these contracts are largely due to changes in exchange rates against the U.S. dollar.
Long-term debt and finance leases:
Long-term debt comprises the revolving credit facility, which is shown net of deferred finance costs that have been capitalized. Finance leases relate to certain fixed assets in our Fuel Specialties and Oilfield Services segments. The carrying amount of long-term debt and finance leases approximates to the fair value.
Stock equivalent units:
The fair values of stock equivalent units are calculated at each balance sheet date using either the Black-Scholes or Monte Carlo method depending on the terms of each grant.
v3.20.2
Derivative Instruments and Risk Management
6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Risk Management
NOTE 12 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT
The Company enters into various foreign currency forward exchange contracts to minimize currency exchange rate exposure from expected future cash flows. As at June 30, 2020 the contracts have maturity dates of up to twelve months at the date of inception. These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for the first six months of 2020 was a gain of $1.8 million (first six months of 2019: gain of $1.0 million).
As at June 30, 2020 and December 31, 2019 the Company did not hold any interest rate swaps. In prior years, the Company entered into interest rate swaps to minimize interest rate exposure related to a portion of its borrowing requirements. These interest rate swaps were designated as hedging instruments, and their impact on accumulated other comprehensive loss for the first six months of 2019 was a loss of $1.5 million.
v3.20.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Legal matters
While we are involved from time to time in claims and legal proceedings that result from, and are incidental to, the conduct of our business including business and commercial litigation, employee and product liability claims, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their property is subject. It is possible, however, that an adverse resolution of an unexpectedly large number of such individual claims or proceedings could in the aggregate have a material adverse effect on the results of operations for a particular year or quarter.
Guarantees
The Company and certain of the Company’s consolidated subsidiaries are contingently liable for certain obligations of affiliated companies primarily in the form of guarantees of debt and performance under contracts entered into as a normal business practice. This includes guarantees of
non-U.S.
excise taxes and customs duties. As at June 30, 2020, such guarantees which are not recognized as liabilities in the condensed consolidated financial statements amounted to $4.9 million (December 31, 2019 - $4.7 million). The remaining terms of the fixed maturity guarantees vary from 1 month to 4 years, with some further guarantees having no fixed expiry date.
Under the terms of the guarantee arrangements, generally the Company would be required to perform should the affiliated company fail to fulfill its obligations under the arrangements. In some cases, the guarantee arrangements have recourse provisions that would enable the Company to recover any payments made under the terms of the guarantees from securities held of the guaranteed parties’ assets.
The Company and its affiliates have numerous long-term sales and purchase commitments in their various business activities, which are expected to be fulfilled with no adverse consequences material to the Company.
v3.20.2
Stock-Based Compensation Plans
6 Months Ended
Jun. 30, 2020
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation Plans
NOTE 14 – STOCK-BASED COMPENSATION PLANS
The Company grants stock options and stock equivalent units (“SEUs”) from time to time as a long-term performance incentive. In certain cases the grants are subject to performance conditions such as the Company’s stock price. Where performance conditions apply the Monte Carlo simulation model is used to determine the fair values. Otherwise the Black-Scholes model is used to determine the fair values.
Stock option plans
The following table summarizes the transactions of the Company’s stock option plans for the six months ended June 30, 2020:
 
    
Number of

Options
    
Weighted
Average
Exercise
Price
    
Weighted
Average
Grant-Date

Fair Value
 
Outstanding at December 31, 2019
     504,459      $ 33.05      $ 41.35  
Granted - at discount
     63,950      $ 1.11      $ 76.80  
              - at market value
     10,419      $ 95.70      $ 18.69  
Exercised
     (81,860    $ 9.73      $ 52.31  
Forfeited
     (13,161    $ 22.43      $ 45.20  
  
 
 
       
Outstanding at June 30, 2020
     483,807      $ 34.41      $ 43.59  
  
 
 
       
At June 30, 2020, there were 43,638 stock options that were exercisable, of which 8,779 had performance conditions attached.
The stock option compensation cost for the first six months of 2020 was $2.8 million (first six months of 2019 – $3.2 million). The total intrinsic value of options exercised in the first six months of 2020 was $4.6 million (first six months of 2019 – $2.7 million).
The total compensation cost related to
non-vested
stock options not yet recognized at June 30, 2020 was $10.2 million and this cost is expected to be recognized over the weighted-average period of 1.93 years.
Stock equivalent units
The following table summarizes the transactions of the Company’s SEUs for the six months ended June 30, 2020:
 
    
Number
of SEUs
    
Weighted
Average
Exercise
Price
    
Weighted

Average
Grant-Date

Fair Value
 
Outstanding at December 31, 2019
     390,816      $ 3.69      $ 59.91  
Granted - at discount
     108,607      $ 0.00      $ 76.86  
              - at market value
     3,634      $ 95.70      $ 18.69  
Exercised
     (88,557    $ 0.86      $ 60.55  
Forfeited
     (17,036    $ 0.86      $ 65.38  
  
 
 
       
Outstanding at June 30, 2020
     397,464      $ 4.27      $ 63.79  
  
 
 
       
At June 30, 2020 there were 57,696 SEUs that are exercisable, of which 51,164 had performance conditions attached.
The charges for SEUs are spread over the life of the award subject to a revaluation to fair value each quarter. The revaluation may result in a charge or a credit to the income statement in the quarter dependent upon our share price and other performance criteria.
The SEU compensation for the first six months of 2020 was a $3.0 million credit (first six months of 2019 – $11.8 million charge). The total intrinsic value of SEUs exercised in the first six months of 2020 was $6.1 million (first six months of 2019 – $7.1 million).
The weighted-average remaining vesting period of
non-vested
SEUs is 2.20 years.
v3.20.2
Reclassifications out of Accumulated Other Comprehensive Loss
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Reclassifications out of Accumulated Other Comprehensive Loss
NOTE 15 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS
Reclassifications out of accumulated other comprehensive loss for the first six months of 2020 were:
 
(in millions)
Details about AOCL Components
  
Amount
Reclassified
from AOCL
    
Affected Line Item in the
Statement where
Net Income is Presented
Defined benefit pension plan items:
     
Amortization of prior service credit
   $ (0.4    See 
(1)
 below
Amortization of actuarial net losses
     0.8      See 
(1)
 below
  
 
 
    
     0.4      Total before tax
     0.0      Income tax expense
  
 
 
    
Total reclassifications
   $ 0.4      Net of tax
  
 
 
    
 
(1)
These items are included in other income and expense. See Note 7 of the Notes to the Condensed Consolidated    Financial Statements for additional information.
Changes in accumulated other comprehensive loss for the first six months of 2020, net of tax, were:
 
(in millions)
  
Defined
Benefit
Pension
Plan Items
    
Cumulative
Translation
Adjustments
    
Total
 
Balance at December 31, 2019
   $ (9.3    $ (65.1    $ (74.4
  
 
 
    
 
 
    
 
 
 
Other comprehensive income before reclassifications
     0.0        (2.4      (2.4
Amounts reclassified from AOCL
     0.4        0.0        0.4  
  
 
 
    
 
 
    
 
 
 
Total other comprehensive income
     0.4        (2.4      (2.0
  
 
 
    
 
 
    
 
 
 
Balance at June 30, 2020
   $ (8.9    $ (67.5    $ (76.4
  
 
 
    
 
 
    
 
 
 
v3.20.2
Recently Issued Accounting Pronouncements
6 Months Ended
Jun. 30, 2020
Accounting Changes and Error Corrections [Abstract]  
Recently Issued Accounting Pronouncements
NOTE 16 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (ASU)
No. 2019-12,
Simplifying the
Accounting
for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company’s disclosures.
v3.20.2
Related Party Transactions
6 Months Ended
Jun. 30, 2020
Related Party Transactions [Abstract]  
Related Party Transactions
NOTE 17 – RELATED PARTY TRANSACTIONS
Mr. Patrick S. Williams has been an executive director of the Company since April 2009 and has been a
non-executive
director of AdvanSix, a chemicals manufacturer, since February 2020. In the first six months of 2020 the Company purchased product from AdvanSix for $0.2 million. As at June 30, 2020, the Company owed $0.0 million to AdvanSix.
Mr. Robert I. Paller has been a
non-executive
director of the Company since November 1, 2009. The Company has retained and continues to retain Smith, Gambrell & Russell, LLP (“SGR”), a law firm with which Mr. Paller holds a position. In the first six months of 2020 the Company incurred fees from SGR of $0.2 million (first six months of 2019 – $0.4 million). As at June 30, 2020, the Company owed $0.0 million to SGR (December 31, 2019 – $0.0 million).
Mr. David F. Landless has been a
non-executive
director of the Company since January 1, 2016 and is a
non-executive
director of Ausurus Group Limited which owns European Metal Recycling Limited (“EMR”). The Company has sold scrap metal to EMR in the first six months of 2020 for a value of $0.0 million (first six months of 2019 – $0.0 million). A tendering process is operated periodically to select the best buyer for the sale of scrap metal by the Company. As at June 30, 2020 EMR owed $0.0 million for scrap metal purchased from the Company (December 31, 2019 – $0.0 million).
v3.20.2
Segment Reporting (Tables)
6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Segment Reporting
The Company evaluates the performance of its segments based on operating income. The following tables analyze sales and other financial information by the Company’s reportable segments:
 
    
Three Months Ended

June 30
    
Six Months Ended

June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Net Sales:
           
Refinery and Performance
   $ 74.9      $ 95.2      $ 183.5      $ 212.5  
Other
     32.5        38.1        70.9        76.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Fuel Specialties
     107.4        133.3        254.4        289.3  
  
 
 
    
 
 
    
 
 
    
 
 
 
Personal Care
     49.8        54.9        112.8        115.9  
Home Care
     21.3        23.1        42.9        50.1  
Other
     24.6        26.7        53.1        56.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Performance Chemicals
     95.7        104.7        208.8        222.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
Oilfield Services
     41.8        122.5        154.0        236.7  
Octane Additives
     0.0        1.9        0.0        1.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
    $
244.9
     $
362.4
     $617.2      $750.7  
  
 
 
    
 
 
    
 
 
    
 
 
 
Gross profit/(loss):
               
Fuel Specialties
   $ 25.4      $ 44.7      $ 76.6      $ 100.4  
Performance Chemicals
     24.9        24.0        52.5        50.6  
Oilfield Services
     9.9        41.5        46.1        79.2  
Octane Additives
     (1.1      0.9        (2.2      (1.3
  
 
 
    
 
 
    
 
 
    
 
 
 
     $
59.1
     $
111.1
     $173.0      $228.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
Operating income/(loss):
               
Fuel Specialties
   $ 4.7      $ 24.1      $ 36.8      $ 57.0  
Performance Chemicals
     12.2        11.0        27.8        24.5  
Oilfield Services
     (12.4      10.1        (5.2      17.9  
Octane Additives
     (1.6      0.1        (2.8      (2.7
Corporate costs
     (15.4      (13.6      (28.2      (28.8
Restructuring charge
     (21.1      0.0        (21.1      0.0  
Impairment of intangible assets
     (19.8      0.0        (19.8      0.0  
  
 
 
    
 
 
    
 
 
    
 
 
 
Total operating
(loss)/
income
   $ (53.4    $ 31.7      $ (12.5    $ 67.9  
  
 
 
    
 
 
    
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
v3.20.2
Earnings per Share (Tables)
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Summary of Earnings Per Share Per share amounts are computed as follows:
 
    
Three Months Ended

June 30
    
Six Months Ended

June 30
 
    
2020
   
2019
    
2020
   
2019
 
Numerator (in millions):
         
Net
 
(loss)/
income available to common stockholders
   $ (39.7   $ 22.3      $ (6.6   $ 51.0  
  
 
 
   
 
 
    
 
 
   
 
 
 
Denominator (in thousands):
         
Weighted average common shares outstanding
     24,564       24,483        24,547       24,468  
Dilutive effect of stock options and awards
     0       195        0       203  
  
 
 
   
 
 
    
 
 
   
 
 
 
Denominator for diluted earnings per share
     24,564       24,678        24,547       24,671  
  
 
 
   
 
 
    
 
 
   
 
 
 
Net
 
(loss)/
income per share, basic:
   $ (1.62   $ 0.91      $ (0.27   $ 2.08  
  
 
 
   
 
 
    
 
 
   
 
 
 
Net
 
(loss)/
income per share, diluted:
   $ (1.62   $ 0.90      $ (0.27   $ 2.07  
  
 
 
   
 
 
    
 
 
   
 
 
 
v3.20.2
Goodwill (Tables)
6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Goodwill
The following table summarizes the goodwill movements:
 
(in millions)
  
Gross Cost
    
Accumulated
Impairment
Losses
    
Net Book
Amount
 
Opening balance at January 1
   $ 599.5      $ (236.5    $ 363.0  
Exchange effect
     0.3        0.0        0.3  
  
 
 
    
 
 
    
 
 
 
Closing balance at June 30
   $ 599.8      $ (236.5    $ 363.3  
  
 
 
    
 
 
    
 
 
 
v3.20.2
Other Intangible Assets (Tables)
6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Other Intangible Assets
The following table summarizes the other intangible assets movements:
 
(in millions)
  
2020
 
Gross cost at January 1
   $ 294.8  
Exchange effect
     0.1  
  
 
 
 
Gross cost at June 30
     294.9  
  
 
 
 
Accumulated amortization at January 1
     (181.3
Amortization expense
     (11.5
Impairment
     (19.8
Exchange effect
     0.0  
  
 
 
 
Accumulated amortization at June 30
     (212.6
  
 
 
 
Net book amount at June 30
   $ 82.3  
  
 
 
 
Schedule of Amortization Expense
The net book amount by category of other intangible assets is shown in the following table:
 
(in millions)
  
June 30

2020
    
December 31

2019
 
Product rights
   $ 8.2      $ 10.1  
Brand names
     2.6        2.9  
Technology
     20.9        32.6  
Customer relationships
     45.8        60.8  
Internally developed software
     4.8        7.1  
  
 
 
    
 
 
 
   $ 82.3      $ 113.5  
  
 
 
    
 
 
 
v3.20.2
Pension and Post-Employment Benefits (Tables)
6 Months Ended
Jun. 30, 2020
United Kingdom Plan [Member]  
Plan Net Pension Credit The following table shows the income statement effect recognized within other income, net:
 
    
Three Months Ended

June 30
    
Six Months Ended
June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Plan net pension credit/(charge):
           
Interest cost on projected benefit obligation
   $ (2.7    $ (3.9    $ (5.5    $ (7.8
Expected return on plan assets
     4.3        5.5        8.8        11.1  
Amortization of prior service credit
     0.2        0.3        0.4        0.5  
Amortization of actuarial net losses
     (0.2      0.0        (0.4      0.0  
  
 
 
    
 
 
    
 
 
    
 
 
 
   $ 1.6      $ 1.9      $ 3.3      $ 3.8  
  
 
 
    
 
 
    
 
 
    
 
 
 
German Plan [Member]  
Plan Net Pension Credit The following table shows the income statement effect recognized within other income and expense:
 
    
Three Months Ended
June 30
    
Six Months Ended

June 30
 
(in millions)
  
2020
    
2019
    
2020
   
2019
 
Plan net pension charge:
           
Interest cost on projected benefit obligation
   $ 0.0      $ 0.0      $ (0.1    $ (0.1
Amortization of actuarial net losses
     (0.3      0.0        (0.4      (0.1
  
 
 
    
 
 
    
 
 
    
 
 
 
   $ (0.3    $ 0.0      $ (0.5    $ (0.2
  
 
 
    
 
 
    
 
 
    
 
 
 
v3.20.2
Income Taxes (Tables)
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Roll-forward of Unrecognized Tax Benefits and Associated Accrued Interest and Penalties
A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:
 
(in millions)
  
Unrecognized
Tax Benefits
    
Interest and
Penalties
    
Total
 
Opening balance at January 1
   $ 14.4      $ 2.0      $ 16.4  
Net change
 
for tax positions of prior periods
     (1.2      0.0        (1.2
  
 
 
    
 
 
    
 
 
 
Closing balance at June 30
     13.2        2.0        15.2  
Current
     0.0        0.0        0.0  
  
 
 
    
 
 
    
 
 
 
Non-current
   $ 13.2      $ 2.0      $ 15.2  
  
 
 
    
 
 
    
 
 
 
v3.20.2
Long-Term Debt (Tables)
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Schedule of Long-Term Debt
Long-term debt consists of the following:
 
(in millions)
  
June 30,

2020
    
December 31,

2019
 
Revolving credit facility
   $ 40.0      $ 60.0  
Deferred finance costs
     (1.2      (1.4
  
 
 
    
 
 
 
     38.8        58.6  
Less current portion
     0.0        0.0  
  
 
 
    
 
 
 
   $ 38.8      $ 58.6  
  
 
 
    
 
 
 
v3.20.2
Plant Closure Provisions (Tables)
6 Months Ended
Jun. 30, 2020
Restructuring and Related Activities [Abstract]  
Movements in Plant Closure and Restructuring Provisions
Movements in the provisions are summarized as follows:
 
(in millions)
  
2020
 
Total at January 1
   $ 49.3  
Charge for the period
     9.8  
Utilized in the period
     (1.3
Exchange effect
     0.1  
  
 
 
 
Total at June 30
     57.9  
Due within one year
     (6.3
  
 
 
 
Due after one year
   $ 51.6  
  
 
 
 
v3.20.2
Fair Value Measurements (Tables)
6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Carrying Amount and Fair Values of the Company's Assets and Liabilities Measured on a Recurring Basis
The following table presents the carrying amount and fair values of the Company’s financial assets and liabilities measured on a recurring basis:
 
    
June 30, 2020
    
December 31, 2019
 
(in millions)
  
Carrying

Amount
    
Fair

Value
    
Carrying

Amount
    
Fair

Value
 
Assets
           
Non-derivatives:
           
Cash and cash equivalents
   $ 58.2      $ 58.2      $ 75.7      $ 75.7  
Derivatives (Level 1 measurement):
           
Other current and
non-current
assets:
           
Foreign currency forward exchange contracts
     0.0        0.0        0.8        0.8  
Liabilities
           
Non-derivatives:
           
Long-term debt (including current portion)
   $ 38.8      $ 38.8      $ 58.6      $ 58.6  
Finance leases (including current portion)
     0.8        0.8        1.5        1.5  
Derivatives (Level 1 measurement):
           
Other current and
non-current
liabilities:
           
Foreign currency forward exchange contracts
     0.6        0.6        0.0        0.0  
Non-financial
liabilities (Level 3 measurement):
           
Other current and
non-current
liabilities:
           
Stock equivalent units
     14.5        14.5        24.6        24.6  
v3.20.2
Stock-Based Compensation Plans (Tables)
6 Months Ended
Jun. 30, 2020
Stock Options Plan [Member]  
Summary of Transactions of Company's Stock Option Plans
The following table summarizes the transactions of the Company’s stock option plans for the six months ended June 30, 2020:
 
    
Number of

Options
    
Weighted
Average
Exercise
Price
    
Weighted
Average
Grant-Date

Fair Value
 
Outstanding at December 31, 2019
     504,459      $ 33.05      $ 41.35  
Granted - at discount
     63,950      $ 1.11      $ 76.80  
              - at market value
     10,419      $ 95.70      $ 18.69  
Exercised
     (81,860    $ 9.73      $ 52.31  
Forfeited
     (13,161    $ 22.43      $ 45.20  
  
 
 
       
Outstanding at June 30, 2020
     483,807      $ 34.41      $ 43.59  
  
 
 
       
Stock Equivalent Units [Member]  
Summarizes Transactions of SEUs
The following table summarizes the transactions of the Company’s SEUs for the six months ended June 30, 2020:
 
    
Number
of SEUs
    
Weighted
Average
Exercise
Price
    
Weighted

Average
Grant-Date

Fair Value
 
Outstanding at December 31, 2019
     390,816      $ 3.69      $ 59.91  
Granted - at discount
     108,607      $ 0.00      $ 76.86  
              - at market value
     3,634      $ 95.70      $ 18.69  
Exercised
     (88,557    $ 0.86      $ 60.55  
Forfeited
     (17,036    $ 0.86      $ 65.38  
  
 
 
       
Outstanding at June 30, 2020
     397,464      $ 4.27      $ 63.79  
  
 
 
       
v3.20.2
Reclassifications out of Accumulated Other Comprehensive Loss (Tables)
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Summary of Reclassifications Out of Accumulated Other Comprehensive Loss
Reclassifications out of accumulated other comprehensive loss for the first six months of 2020 were:
 
(in millions)
Details about AOCL Components
  
Amount
Reclassified
from AOCL
    
Affected Line Item in the
Statement where
Net Income is Presented
Defined benefit pension plan items:
     
Amortization of prior service credit
   $ (0.4    See 
(1)
 below
Amortization of actuarial net losses
     0.8      See 
(1)
 below
  
 
 
    
     0.4      Total before tax
     0.0      Income tax expense
  
 
 
    
Total reclassifications
   $ 0.4      Net of tax
  
 
 
    
 
(1)
These items are included in other income and expense. See Note 7 of the Notes to the Condensed Consolidated    Financial Statements for additional information.
Changes in Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss for the first six months of 2020, net of tax, were:
 
(in millions)
  
Defined
Benefit
Pension
Plan Items
    
Cumulative
Translation
Adjustments
    
Total
 
Balance at December 31, 2019
   $ (9.3    $ (65.1    $ (74.4
  
 
 
    
 
 
    
 
 
 
Other comprehensive income before reclassifications
     0.0        (2.4      (2.4
Amounts reclassified from AOCL
     0.4        0.0        0.4  
  
 
 
    
 
 
    
 
 
 
Total other comprehensive income
     0.4        (2.4      (2.0
  
 
 
    
 
 
    
 
 
 
Balance at June 30, 2020
   $ (8.9    $ (67.5    $ (76.4
  
 
 
    
 
 
    
 
 
 
v3.20.2
Basis of Presentation - Addtional Information (Detail) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Allowances for doubtful accounts $ 4.3 $ 3.8
v3.20.2
Segment Reporting - Additional Information (Detail)
6 Months Ended
Jun. 30, 2020
Segment
Segment Reporting [Abstract]  
Number of reportable segments 4
v3.20.2
Segment Reporting - Segment Reporting (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting Information [Line Items]        
Net sales $ 244.9 $ 362.4 $ 617.2 $ 750.7
Gross profit/(loss) 59.1 111.1 173.0 228.9
Restructuring charge (21.1) (0.0) (21.1) (0.0)
Impairment of intangible assets (19.8) (0.0) (19.8) (0.0)
Operating income/(loss) (53.4) 31.7 (12.5) 67.9
Operating Segments [Member] | Fuel Specialties [Member]        
Segment Reporting Information [Line Items]        
Net sales 107.4 133.3 254.4 289.3
Gross profit/(loss) 25.4 44.7 76.6 100.4
Operating income/(loss) 4.7 24.1 36.8 57.0
Operating Segments [Member] | Fuel Specialties [Member] | Refinery and Performance [Member]        
Segment Reporting Information [Line Items]        
Net sales 74.9 95.2 183.5 212.5
Operating Segments [Member] | Fuel Specialties [Member] | Other [Member]        
Segment Reporting Information [Line Items]        
Net sales 32.5 38.1 70.9 76.8
Operating Segments [Member] | Performance Chemicals [Member]        
Segment Reporting Information [Line Items]        
Net sales 95.7 104.7 208.8 222.8
Gross profit/(loss) 24.9 24.0 52.5 50.6
Operating income/(loss) 12.2 11.0 27.8 24.5
Operating Segments [Member] | Performance Chemicals [Member] | Personal Care [Member]        
Segment Reporting Information [Line Items]        
Net sales 49.8 54.9 112.8 115.9
Operating Segments [Member] | Performance Chemicals [Member] | Home Care [Member]        
Segment Reporting Information [Line Items]        
Net sales 21.3 23.1 42.9 50.1
Operating Segments [Member] | Performance Chemicals [Member] | Other [Member]        
Segment Reporting Information [Line Items]        
Net sales 24.6 26.7 53.1 56.8
Operating Segments [Member] | Oilfield Services [Member]        
Segment Reporting Information [Line Items]        
Net sales 41.8 122.5 154.0 236.7
Gross profit/(loss) 9.9 41.5 46.1 79.2
Operating income/(loss) (12.4) 10.1 (5.2) 17.9
Operating Segments [Member] | Octane Additives [Member]        
Segment Reporting Information [Line Items]        
Net sales 0.0 1.9 0.0 1.9
Gross profit/(loss) (1.1) 0.9 (2.2) (1.3)
Operating income/(loss) (1.6) 0.1 (2.8) (2.7)
Corporate, Non-Segment [Member]        
Segment Reporting Information [Line Items]        
Corporate costs (15.4) (13.6) (28.2) (28.8)
Restructuring charge (21.1) (0.0) (21.1) (0.0)
Impairment of intangible assets $ (19.8) $ (0.0) $ (19.8) $ (0.0)
v3.20.2
Earnings Per Share - Additional Information (Detail) - shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Earnings Per Share [Abstract]        
Average number of anti-dilutive options excluded from the calculation of diluted earnings per share 0 12,539 0 212,095
v3.20.2
Earnings Per Share - Summary of Earnings Per Share (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Numerator (in millions):        
Net (loss)/income available to common stockholders $ (39.7) $ 22.3 $ (6.6) $ 51.0
Denominator (in thousands):        
Weighted average common shares outstanding 24,564 24,483 24,547 24,468
Dilutive effect of stock options and awards 0 195 0 203
Denominator for diluted earnings per share 24,564 24,678 24,547 24,671
Net (loss)/income per share, basic: $ (1.62) $ 0.91 $ (0.27) $ 2.08
Net (loss)/income per share, diluted: $ (1.62) $ 0.90 $ (0.27) $ 2.07
v3.20.2
Restructuring - Additional Information (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Restructuring Cost and Reserve [Line Items]        
Restructuring charges provided for during the period $ 21.1 $ 0.0 $ 21.1 $ 0.0
Impairment of tangible assets     2.0 $ 0.0
Environmental Monitoring Expense     2.0  
Octane Additives [Member] | Operating Segments [Member] | Tetra Ethyl Lead [Member]        
Restructuring Cost and Reserve [Line Items]        
Restructuring charges provided for during the period     21.1  
Environment remediation and monitoring costs     7.5  
Expected loss on contracts     7.2  
Impairment of tangible assets     2.0  
Restructuring costs due to downsizing of operations     $ 2.4  
v3.20.2
Goodwill - Summary of Goodwill (Detail)
$ in Millions
6 Months Ended
Jun. 30, 2020
USD ($)
Goodwill [Line Items]  
Gross cost, beginning balance $ 599.5
Accumulated impairment losses, beginning balance (236.5)
Net book amount, beginning balance 363.0
Exchange effect 0.3
Exchange effect 0.0
Gross cost, ending balance 599.8
Accumulated impairment losses, ending balance (236.5)
Net book amount, ending balance $ 363.3
v3.20.2
Other Intangible Assets - Summary of Other Intangible Assets (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Jul. 31, 2020
Dec. 31, 2019
Gross cost at January 1     $ 294.8      
Exchange effect     0.1      
Gross cost at June 30 $ 294.9   294.9      
Accumulated amortization at January 1     (181.3)      
Amortization expense     (11.5) $ (11.5)    
Impairment (19.8) $ (0.0) (19.8) $ (0.0)    
Exchange effect     0.0      
Accumulated amortization at June 30 (212.6)   (212.6)      
Net book amount at June 30 $ 82.3   $ 82.3   $ 82.3 $ 113.5
v3.20.2
Other Intangible Assets - Schedule of Amortization Expense (Detail) - USD ($)
$ in Millions
Jul. 31, 2020
Jun. 30, 2020
Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]      
Gross cost at January 1   $ 294.9 $ 294.8
Other Intangible Assets, Net $ 82.3 82.3 113.5
Product Rights [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross cost at January 1   8.2 10.1
Brand Names [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross cost at January 1   2.6 2.9
Technology [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross cost at January 1   20.9 32.6
Customer and Distributor Relationships [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross cost at January 1   45.8 60.8
Internally Developed Software [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross cost at January 1   $ 4.8 $ 7.1
v3.20.2
Other Intangible Assets - Additional Information (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Finite-Lived Intangible Assets [Line Items]        
Amortization expense     $ 11.5 $ 11.5
Impairment of intangible assets $ 19.8 $ 0.0 19.8 $ 0.0
Technology-Based Intangible Assets [Member]        
Finite-Lived Intangible Assets [Line Items]        
Impairment of intangible assets     10.0  
Customer and Distributor Relationships [Member]        
Finite-Lived Intangible Assets [Line Items]        
Impairment of intangible assets     $ 9.8  
v3.20.2
Pension and Post-Employment Benefits - Additional Information (Detail) - Selling, General and Administrative Expenses [Member] - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
United Kingdom Plan [Member]          
Defined Benefit Plan Disclosure [Line Items]          
Net service cost, total $ 0.3 $ 0.3 $ 0.6 $ 0.5  
Germany [Member]          
Defined Benefit Plan Disclosure [Line Items]          
Net service cost, total 0.1 $ 0.1 0.1 $ 0.1  
Europe [Member]          
Defined Benefit Plan Disclosure [Line Items]          
Post-employment obligations European businesses $ 4.6   $ 4.6   $ 4.5
v3.20.2
Pension and Post-Employment Benefits - Plan Net Pension Credit (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
United Kingdom Plan [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Interest cost on projected benefit obligation $ (2.7) $ (3.9) $ (5.5) $ (7.8)
Expected return on plan assets 4.3 5.5 8.8 11.1
Amortization of prior service credit 0.2 0.3 0.4 0.5
Amortization of actuarial net losses (0.2) 0.0 (0.4) 0.0
Net pension credit total 1.6 1.9 3.3 3.8
Germany [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Interest cost on projected benefit obligation (0.0) (0.0) (0.1) (0.1)
Amortization of actuarial net losses (0.3) 0.0 (0.4) (0.1)
Net pension credit total $ (0.3) $ (0.0) $ (0.5) $ (0.2)
v3.20.2
Income Taxes - Roll-forward of Unrecognized Tax Benefits and Associated Accrued Interest and Penalties (Detail) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Income Tax Contingency [Line Items]    
Opening balance at January 1 $ 16.4  
Net change for tax positions of prior periods (1.2)  
Closing balance at June 30 15.2  
Current 0.0  
Non-current 15.2 $ 16.4
Interest and Penalties [Member]    
Income Tax Contingency [Line Items]    
Opening balance at January 1 2.0  
Net change for tax positions of prior periods 0.0  
Closing balance at June 30 2.0  
Current 0.0  
Non-current 2.0  
Unrecognized Tax Benefits [Member]    
Income Tax Contingency [Line Items]    
Opening balance at January 1 14.4  
Net change for tax positions of prior periods (1.2)  
Closing balance at June 30 13.2  
Current 0.0  
Non-current $ 13.2  
v3.20.2
Income Taxes - Additional Information (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2020
Jun. 30, 2020
Dec. 31, 2015
Dec. 31, 2019
Income Tax Contingency [Line Items]        
Unrecognized tax benefits would impact effective tax rate if recognized $ 15.2 $ 15.2    
Unrecognized tax benefit 15.2 15.2   $ 16.4
Income tax interest expense   $ 0.2    
Income tax examination, description   The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2016 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Germany (2015 onwards), Switzerland (2015 onwards), Spain (2016 onwards), France (2017 onwards) and the United Kingdom (2018 onwards).    
Increase to income tax expense   $ 0.4    
Interest and Penalties [Member]        
Income Tax Contingency [Line Items]        
Unrecognized tax benefit 2.0 2.0   $ 2.0
Italian Tax Authorities [Member]        
Income Tax Contingency [Line Items]        
Unrecognized tax benefit 3.1 3.1    
United States [Member]        
Income Tax Contingency [Line Items]        
Unrecognized tax benefit 12.1 $ 12.1    
Non-US [Member] | Earliest Tax Year [Member]        
Income Tax Contingency [Line Items]        
Open tax year   2011    
Non-US [Member] | Latest Tax Year [Member]        
Income Tax Contingency [Line Items]        
Open tax year   2014    
Non-US [Member] | Historical Impairment Of Subsidiaries [Member]        
Income Tax Contingency [Line Items]        
Increase in uncertain tax positions     $ 1.2  
Decrease in uncertain tax positions 1.2      
Non-US [Member] | Historical Impairment Of Subsidiaries [Member] | Interest and Penalties [Member]        
Income Tax Contingency [Line Items]        
Increase to income tax expense $ (0.2)      
v3.20.2
Long-Term Debt - Schedule of Long-Term Debt (Detail) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Debt Instrument [Line Items]    
Deferred finance costs $ (1.2) $ (1.4)
Long-term debt 38.8 58.6
Less current portion (0.0) (0.0)
Long-term debt, net of current portion 38.8 58.6
Revolving Credit Facility [Member]    
Debt Instrument [Line Items]    
Long-term debt $ 40.0 $ 60.0
v3.20.2
Plant Closure Provisions - Movements in Plant Closure and Restructuring Provisions (Detail) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Restructuring and Related Activities [Abstract]    
Beginning Balance $ 49.3  
Charge for the period 9.8  
Utilized in the period (1.3)  
Exchange effect 0.1  
Ending Balance 57.9  
Due within one year (6.3) $ (5.6)
Due after one year $ 51.6 $ 43.7
v3.20.2
Plant Closure Provisions - Additional Information (Detail) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Operating Segments [Member] | Tetra Ethyl Lead [Member] | Operating Segments [Member]    
Restructuring Cost and Reserve [Line Items]    
Additional provision restructuring charges plant closure $ 7.5  
Remediation [Member]    
Restructuring Cost and Reserve [Line Items]    
Accretion expense recognized $ 9.8 $ 2.1
v3.20.2
Fair Value Measurements - Carrying Amount and Fair Values of the Company's Assets and Liabilities Measured on a Recurring Basis (Detail) - Recurring [Member] - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Carrying Amount [Member]    
Non-derivatives:    
Cash and cash equivalents $ 58.2 $ 75.7
Non-derivatives:    
Long-term debt (including current portion) 38.8 58.6
Finance leases (including current portion) 0.8 1.5
Carrying Amount [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Foreign Currency Forward Exchange Contracts [Member]    
Derivatives (Level 1 measurement):    
Foreign currency forward exchange contracts 0.0 0.8
Derivatives (Level 1 measurement):    
Foreign currency forward exchange contracts 0.6 0.0
Carrying Amount [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Non-financial liabilities (Level 3 measurement):    
Stock equivalent units 14.5 24.6
Fair Value [Member]    
Non-derivatives:    
Cash and cash equivalents 58.2 75.7
Non-derivatives:    
Long-term debt (including current portion) 38.8 58.6
Finance leases (including current portion) 0.8 1.5
Fair Value [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Foreign Currency Forward Exchange Contracts [Member]    
Derivatives (Level 1 measurement):    
Foreign currency forward exchange contracts 0.0 0.8
Derivatives (Level 1 measurement):    
Foreign currency forward exchange contracts 0.6 0.0
Fair Value [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Non-financial liabilities (Level 3 measurement):    
Stock equivalent units $ 14.5 $ 24.6
v3.20.2
Derivative Instruments and Risk Management - Additional Information (Detail) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Exchange Contracts [Member] | Other net income/(expense) [Member]    
Derivative [Line Items]    
Amount of gain/(loss) recognized in income $ 1.8 $ 1.0
Designated as Hedging Instrument [Member] | Interest Rate Swaps [Member] | Accumulated Other Comprehensive Loss [Member]    
Derivative [Line Items]    
Amount of gain/(loss) recognized in income   $ 1.5
v3.20.2
Commitments and Contingencies - Additional Information (Detail) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Other Commitments [Line Items]    
Guarantees $ 4.9 $ 4.7
Minimum [Member]    
Other Commitments [Line Items]    
Fixed maturity guarantee remaining term 1 month  
Maximum [Member]    
Other Commitments [Line Items]    
Fixed maturity guarantee remaining term 4 years  
v3.20.2
Stock-Based Compensation Plans - Additional Information (Detail) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock option compensation $ 2.8 $ 3.2
Stock Options Plan [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Number exercisable and fully vested 43,638  
Fully vested stock options with performance conditions attached 8,779  
Stock option compensation $ 2.8 3.2
Total intrinsic value exercised 4.6 2.7
Total compensation cost related to non-vested stock options not yet recognized $ 10.2  
Expected compensation cost recognized over the weighted-average period 1 year 11 months 4 days  
Stock Equivalent Units [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Fully vested stock options with performance conditions attached 51,164  
Total intrinsic value exercised $ 6.1 7.1
Expected compensation cost recognized over the weighted-average period 2 years 2 months 12 days  
Number of exercisable SEUs 57,696  
Compensation cost $ 3.0 $ 11.8
v3.20.2
Stock-Based Compensation Plans - Summary of Transactions of the Company's Stock Option Plans (Detail) - Stock Options Plan [Member]
6 Months Ended
Jun. 30, 2020
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Outstanding, Number of Options, Beginning balance | shares 504,459
Exercised, Number of Options | shares (81,860)
Forfeited, Number of Options | shares (13,161)
Outstanding, Number of Options, Ending balance | shares 483,807
Outstanding, Weighted Average Exercise Price, Beginning balance $ 33.05
Exercised, Weighted Average Exercise Price 9.73
Forfeited, Weighted Average Exercise Price 22.43
Outstanding, Weighted Average Exercise Price, Ending balance 34.41
Outstanding, Weighted Average Grant-Date Fair Value 41.35
Exercised, Weighted Average Grant-Date Fair Value 52.31
Forfeited, Weighted Average Grant-Date Fair Value 45.20
Outstanding, Weighted Average Grant-Date Fair Value $ 43.59
Discount [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Granted, Number of Options | shares 63,950
Granted, Weighted Average Exercise Price $ 1.11
Granted, Weighted Average Grant-Date Fair Value $ 76.80
Market Value [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Granted, Number of Options | shares 10,419
Granted, Weighted Average Exercise Price $ 95.70
Granted, Weighted Average Grant-Date Fair Value $ 18.69
v3.20.2
Stock-Based Compensation Plans - Summarizes Transactions of SEUs (Detail) - Stock Equivalent Units [Member]
6 Months Ended
Jun. 30, 2020
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Outstanding, Number of SEUs, Beginning balance | shares 390,816
Granted at discount, Number of SEUs | shares 108,607
Granted at market value, Number of SEUs | shares 3,634
Exercised, Number of SEUs | shares (88,557)
Forfeited, Number of SEUs | shares (17,036)
Outstanding, Number of SEUs, Ending balance | shares 397,464
Outstanding, Weighted Average Exercise Price, Beginning balance $ 3.69
Granted at discount, Weighted Average Exercise Price 0.00
Granted at market value, Weighted Average Exercise Price 95.70
Exercised, Weighted Average Exercise Price 0.86
Forfeited, Weighted Average Exercise Price 0.86
Outstanding, Weighted Average Exercise Price, Ending balance 4.27
Outstanding, Weighted Average Grant-Date Fair Value 59.91
Granted at discount, Weighted Average Grant-Date Fair Value 76.86
Granted at market value, Weighted Average Grant-Date Fair Value 18.69
Exercised, Weighted Average Grant-Date Fair Value 60.55
Forfeited, Weighted Average Grant-Date Fair Value 65.38
Outstanding, Weighted Average Grant-Date Fair Value $ 63.79
v3.20.2
Reclassifications out of Accumulated Other Comprehensive Loss - Summary of Reclassifications out of Accumulated Other Comprehensive Loss (Detail)
$ in Millions
6 Months Ended
Jun. 30, 2020
USD ($)
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]  
Total reclassifications $ (0.4)
Defined Benefit Pension Plan Items [Member]  
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]  
Total reclassifications (0.4)
Reclassification Out of Accumulated Other Comprehensive Income/(Loss) [Member]  
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]  
Total before tax 0.4
Income tax expense (0.0)
Total reclassifications 0.4
Reclassification Out of Accumulated Other Comprehensive Income/(Loss) [Member] | Defined Benefit Pension Plan Items [Member]  
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]  
Amortization of prior service credit (0.4)
Amortization of actuarial net losses $ 0.8
v3.20.2
Reclassifications out of Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Loss (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance     $ 918.5  
Other comprehensive income before reclassifications     (2.4)  
Amounts reclassified from AOCL     0.4  
Total other comprehensive income/(loss) $ 5.9 $ 2.4 (2.0) $ (3.3)
Ending Balance 899.2   899.2  
Accumulated Other Comprehensive Loss [Member]        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance     (74.4)  
Ending Balance (76.4)   (76.4)  
Defined Benefit Pension Plan Items [Member]        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance     (9.3)  
Other comprehensive income before reclassifications     0.0  
Amounts reclassified from AOCL     0.4  
Total other comprehensive income/(loss)     0.4  
Ending Balance (8.9)   (8.9)  
Foreign Currency Translation Items [Member]        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance     (65.1)  
Other comprehensive income before reclassifications     (2.4)  
Amounts reclassified from AOCL     (0.0)  
Total other comprehensive income/(loss)     (2.4)  
Ending Balance $ (67.5)   $ (67.5)  
v3.20.2
Related Party Transactions - Additional Information (Detail) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Smith, Gambrell & Russell, LLP [Member]      
Related Party Transaction [Line Items]      
Fees payable to Smith, Gambrell & Russell $ 0.2 $ 0.4  
Amount due to related party 0.0   $ 0.0
European Metal Recycling Limited [Member]      
Related Party Transaction [Line Items]      
Amount due to related party 0.0   $ 0.0
Tendering process to select best buyer of scrap metal 0.0 $ 0.0  
Advan Six [Member]      
Related Party Transaction [Line Items]      
Amount due to related party 0.0    
Tendering process to select best buyer of scrap metal $ 0.2